NAIM CENDERA HOLDINGS BERHAD Company No. 585467-M Incorporated in Malaysia Annual Report 2006 (Revised Cover) Shareholders enjoy a 260% return on investment in just 3½ years www.naimcendera.com Revenue grew 24.3% to RM526 million Revenue grew 24.3% to RM526 million Shareholders enjoy a 260% return on investment in just 3½ years Ranked Top 20 Overall for Corporate Governance Ranked Top 20 Overall for Corporate Governance RM3.5 Billion Order Book (Page 20) RM3.5 Billion Order Book (Page 20) Land Bank approx. 3,100 acres with estimated GDV RM4.8 Billion Land Bank approx. 3,100 acres with estimated GDV RM4.8 Billion
Transcript
NAIM CENDERA HOLDINGS BERHADCompany No. 585467-M Incorporated in Malaysia
Annual Report 2006(Revised Cover)
Shareholdersenjoy a 260% return
on investment injust 3½ years
www.naimcendera.com
Revenue grew 24.3%to RM526 million
Revenue grew 24.3%to RM526 million
Shareholdersenjoy a 260% return
on investment injust 3½ years
Ranked Top 20Overall for Corporate
Governance
Ranked Top 20Overall for Corporate
GovernanceRM3.5 Billion
Order Book(Page 20)
RM3.5 BillionOrder Book
(Page 20)
Land Bank approx.3,100 acres with estimated
GDV RM4.8 Billion
Land Bank approx.3,100 acres with estimated
GDV RM4.8 Billion
Our cover this year uses a bold and hard-hitting format to reinforce our reputation for vibrant and continuing growth. The central motif is an artist’s impression of our proposed new corporate headquarters, to be located in central Kuching. The building, when complete, will house the Group’s headquarters management team, as well as a number of prestigious corporate tenants, and will feature state-of-the art facilities designed to position it as one of the city’s key commercial hubs.
The Logo type display the word Naim in green, red and gold colours which reflet the group’s strength and capablities. Green represents growth, sincerity and fairness, red represents strength and prosperity, whilst gold represents excellence and superior quality.
The word Naim is intersected by the apex of a toroid, a ring-like shape possessing exceptional strength, stablity and integrity. The conjuction of the golden letter A and the toroid sugguests a dazzling sunrise, predicting a shining long-term future for the group.
logo rational
contents
Balingian BridgeBalingian Bridge
To be the leading home builder and contractor in every market in which we operate, and in every aspect of our operations, leading the way in quality, reliability, and value for money.
To provide the finest products and services to our customers.
To provide increasing value and superior returns for our shareholders.
To empower every member of our staff to develop their potential to the maximum.
To be a role model customer for our suppliers, sub-contractors and service providers.
To contribute meaningfully and positively to the community and the society that nurtures us.
our vision
our mission
Year 1997 1998 1999 2000 2001
Revenue 59,817 82,234 101,009 152,059 183,313
Profit before taxation 15,438 19,785 29,527 39,463 39,730
Net Profit 9,071 11,558 23,867 20,197 25,897
Total Assets 58,862 61,425 100,893 144,862 191,583
Net Tangible Assets 15,770 27,310 45,443 61,194 81,175
Total Number of Shares 203,425 203,425 203,425 203,425 203,425
Earnings Per share (sen) 4.46 5.68 11.73 9.93 12.73
Gross Dividend Rate (%) * - - 2.46% 2.46% 2.95%
Net TangibleAssets Per Share (sen) 7.75 13.42 22.34 30.08 39.90
Gearing Ratio 0.42 0.04 0.06 0.06 0.09
10-year financial highlights (in RM,000)
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* Based on the gross dividend declared and paid by Naim Cendera Sdn. Bhd. of RM5,000,000, RM6,000,000 and RM6,000,000 in respect of financial years ended 31 December 2000, 2001, 2002 respectively and the number of shares assumed in issue of 203,425,000 shares. In 2003 the gross dividend paid was RM22,500,000 based on the number of shares in issue, i.e. 250,000,000 shares.
From 2004 onwards, gross dividends paid refer to dividends paid by Naim Cendera Holdings Berhad.
0
100,000
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50,000
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250,000
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2002 2003 2004 2005 2006
244,098 270,951 343,710 423,094 525,997
51,554 77,988 114,964 123,128 104,849
31,772 48,483 69,495 79,145 66,229
222,851 567,301 657,481 710,277 793,841
107,787 380,857 422,607 459,499 487,683
107,818 352,228 400,087 459,499 489,816
203,425 250,000 250,000 250,000 250,000
15.62 19.39 27.80 32.00 27.10
15.24% 9.00% 12.00% 12.00% 15.00%
52.99 152.34 169.04 183.80 195.07
0.07 0.006 0.002 0.001 0.007
Note: The financial highlights for the years ended 31 December 1997 to 2002 are presented on a pro-forma basis (as if Naim Cendera Sdn Bhd (NCSB) and its subsidiaries were part of the Naim Cendera Holdings Group since 1 January 1997), and are for illustrative purposes only.
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
statements in respect to the Naim Group’s financial
condition, results of operations and business. These
forward-looking statements represent the Naim Group’s
expectations or beliefs concerning future events and
involve known and unknown risks and uncertainties that
could cause actual results, performance or events to
differ materially from those expressed or implied in such
statements. Readers are hereby cautioned that a number
of factors could cause actual results to differ, in some
instances materially, from those anticipated or implied in
any forward-looking statement. In this respect readers
must therefore not rely solely on these statements in
making investment decisions regarding the Naim Group.
The Board and the Naim group shall not be responsible
for any investment decisions made by the readers in
reliance on those forward-looking statements. Forward-
looking statements speak only as of the date they are
made, and it should not be assumed that they have been
reviewed or updated in the light of new information or
future events that would arise in the interim of the
publication of this Annual Report and the time of reading
this Annual Report. The Board have however established
a Risk Management Committee to mitigate as much as
practicably possible the consequences of any uncertain-
ties and contingencies. Further details can be found in
the Statement on Corporate Governance on pages 47 to
66.
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
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Wisma Naim
Stock Exchange Listing Main BoardOn 12 September 2003Sector: PropertyStock Code: 5073Stock Name: Naim
Incorporation5 July, 2002 in MalaysiaUnder the Companies Act, 1965
AuditorsKPMG (Firm No AF0758)Chartered AccountantsLevel 6, Westmoore House,Twin Tower Centre, Rock Road93200, Kuching, Sarawak, Malaysia.
SolicitorsAlvin Chong & Partners AdvocatesLots 176-177 (2nd Floor), Jalan Song Thian Cheok 93100 Kuching, Sarawak, Malaysia.Principal BankersBumiputra-Commerce Bank BerhadGround Floor Lot 1.1, Bangunan SatokJalan Satok/Kulas 93400, Kuching, Sarawak, Malaysia.
Trading/Services Division2nd Floor, No. 16, Lot 2348, Jalan Tun Ahmad Zaidi Adruce 93150, Bromill Estate Commercial Centre, Kuching, Sarawak, Malaysia.
Miri OfficesGround Floor, Lot 889, 9 MCLD, Miri Waterfront, Commercial Centre,98000 Miri, Sarawak, Malaysia.
Lot 5906-5911, Block 10, Desa Pujut Shoplot, Bandar Baru Permyjaya,P.O. Box 369, 98107, Lutong, Miri, Sarawak, Malaysia.
Bintulu OfficeSublot 2, Lot 220, B1-32, Batu 6, Jalan Bintulu-Sibu, P.O. Box 163, 97000, Bintulu, Sarawak, Malaysia.
corporate information
corporate structure
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
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Engineering / Construction
Naim Citra Sdn BhdNaim Cendera Sdn Bhd 100%
Total Reliability Sdn BhdNaim Cendera Sdn Bhd 51%Pailing Construction Sdn Bhd 40%HWS Properties Sdn Bhd 9%
NCSB Engineering Sdn BhdNaim Cendera Sdn Bhd 100%
Manufacturing
TR Bricks Sdn BhdTotal Reliability Sdn Bhd 51%Fojohn Concrete Sdn Bhd 30%Naim Cendera Sdn Bhd 19%
TR Concrete Sdn BhdTotal Reliability Sdn Bhd 35%ZI Corporation Sdn Bhd 35%Fojohn Concrete Sdn Bhd 30%
TR Smart Piles Sdn BhdNaim Cendera Sdn Bhd 51%Smartpiles Sdn Bhd 30%Fojohn Concrete Sdn Bhd 10%HWS Properties Sdn Bhd 9%
Naim Ready Mix Sdn BhdNaim Cendera Sdn Bhd 80%Chieng Kai Chin 10%Pau Ngie Sing 10%
Property Development
Khidmat Mantap Sdn BhdNaim Cendera Sdn Bhd 100%
Desa Ilmu Sdn BhdNaim Cendera Sdn Bhd 60%Land Custody & DevelopmentAuthority 20%Custodev Sdn Bhd 20%
Naim Commercial Sdn BhdNaim Cendera Sdn Bhd 100%
Property Investment
Yakin Pelita Sdn BhdNaim Cendera Sdn Bhd 100%
Eighteen Other Dormant Companies
Naim Cendera Sdn BhdNaim Cendera Holdings Berhad 100%
Trading / Services
Naim Cendera Dua Sdn BhdNaim Cendera Sdn Bhd 100%
TR Green Sdn BhdNaim Cendera Sdn Bhd 100%
Naim Equipment Sdn BhdNaim Cendera Sdn Bhd 100%
NAIM CENDERA HOLDINGS BERHAD
Board of Directors
Deputy Managing Director
Managing Director
Head of Corporate Affairs
Executive Director Business Development & Construction
Business Development Division
Construction Division
Government Projects
Property Investment
Other Investment
Secretarial/ Legal/ Compliance
Public Relations/ Investor Relations
Customer Relations
organisational structure
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Projects
Design
Planning
Contract
Internal Audit
QAQC / HSE
Executive Director Finance & Operations
Manufacturing &Trading Division
HR & FacilitiesManagement Division
ICT Division Finance Division
Property Division
Quantity Surveying
Projects
Land Administration
Sales
Trading
Manufacturing
Human Resource
Facilities Management
IT Infrastructure
IT Applications
Corporate Planning
Accounts
Credit Control
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporate in Malaysia
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corporate profile
Naim Cendera Holdings Berhad is a company listed on the Main Board of Bursa Malaysia Berhad.
The Company is the holding company for its 100% owned subsidiary, Naim Cendera Sdn Bhd (NCSB), which is primarily involved in property development and construction. NCSB was formed on 12 April 1993 and has been active in the property and construction fields since September 1995. It focuses its business efforts on two principal areas: integrated property developments combining residential, commercial and industrial properties with infrastructure and public amenities; and contracting of construction, civil engineering and infrastructure projects.
NCSB's flagship property developments are Bandar Baru Permyjaya in Min, Desa Ilmu in Kota Samarahan, and the up-market Riveria satellite township in Kuching's southern corridor. They are reinforced by a number of smaller residential and commercial developments in Sarawak's major population centres. Together these developments will provide more than
23,000 homes and commercial buildings with a combined population of over 105,000. Upon completion, their combined GDV is estimated to be in excess of RM3.3 billion. Future growth is assured by a vast land bank of over 2,600 acres, spread through out key growth areas of Sarawak.
NCSB is also a Class A Bumiputera Contractor with ISO 9002 certification. As well as implementing the NCSB's own development projects, it has carried out almost RM1 billion of Federal and State Government contracts, and has a construction order book worth over RM3.5 billion. It focuses on excellent quality and timely delivery, a philosophy that has earned NCSB a host of industry awards including the following:
2005 Winner of the 17th International Construction & Global Quality Management (GQM) Award, European Trade Leaders' Club, Madrid, Spain.
2005 Winner of the Corporate, Social & Environment Responsibility (CSR) Award from the Bahrain Malaysia International Trade & Investment Bureau.
2005 Winner of the KPMG Shareholder Value Award 2004 Construction & Properties Sector, awarded by KPMG and The Edge.
2004 Winner of the prestigious Builder Of The Year Award from the Construction Industry Development Board.
2004 Bestowed Industry Excellence for Construction Award under the Malaysia Canada Business Council's Business Excellence Awards for 2004.
2004 Winner of the Malaysia Construction Industry Excellence Award (MCIEA) in Medium Scale Engineering Project from the Construction Industry Development Board.
2003 Winner of the Malaysia Construction Industry Excellence Award (MCIEA) in Medium Scale Building Project from the Construction Industry Development Board.
2003 Winner of Most Outstanding Annual Corporate Report (non-listed company) from the Sarawak Chamber of Commerce & Industry.
2002 First (and still the only) Sarawak-based company to win the Construction Industry Development Board's Best Contractor Award.
NCSB is also active in the manufacturing, trading and distribution of building materials, which provides useful profits as well as valuable support for the Property and Infrastructure divisions.
Naim Cendera Holdings Berhad was listed on the Main Board of Bursa Malaysia Berhad on 12 September 2003. It is the largest development group in Sarawak in terms of units completed, according to leading industry analysts CH Williams Talhar Wong & Yeo Sdn Bhd.
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On behalf of the
Board of Directors it
gives us great
pleasure to present
your Company’s
Annual Report
for the year ended
31 December 2006,
our 11th full year of
operation.
Financial Performance
The Group recorded 24.3% increase in revenue to RM526 million in
the period under review, as against RM423 million for 2005. Profit before tax
was RM104.9 million, compared to RM123.1 million achieved in 2005.
Contribution to revenue from the property division was 41%, with the
construction division contributing a further 52%, compared to contributions
of 73% and 23% for these respective divisions in 2005. Thus the provisional
results for 2006 are slightly below expectations, with basic earnings of 27.1
sen per ordinary share compared to 32.0 sen in 2005.
This is the first and only time that the Group has performed below expectations
in 11 years of operation, and given our previous track record of 10 years
continuous growth in revenue and profits, these results can only be described
as disappointing. However, the major factors affecting the Group’s overall
performance were unfortunately beyond our control. For the record, the
main factors for the below par results were the delays in commencement of
two major construction projects – the Bengoh Dam and the Sibu-Matadeng
Road – and a distinct softening of the property market in Kuching (although
the Miri property market remained firm).
message to our shareholders
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
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Comparative Financial Performance 2005-2006Revenue Gross Profit Net Profit Earnings Per Net Tangible Shareholders’ Market Gross Profit as % of
Growth in Investor Returns 2005-2006Gross Dividend Net Dividend Gross Dividend
Year Per Share (Sen) Per Share (Sen) % of Profit Yield (%)
2005 12.00 8.64 27.00 4.03
2006 15.00 10.80 39.85 4.81
% change +25.00 +25.00 +47.60 +19.36
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Creation of Shareholder Value
The primary objective of all of the Naim Group’s activities is thecreation of added value for our shareholders, a goal we haveonce again successfully achieved despite the slight decline inprofit for 2006. For example, our net tangible assets (NTA) havegrown more than 73 times, from RM6.61 million in 1996 to RM487.7million at the end of 2006.
It is also heartening to note how the market views both ourperformance and our future prospects. Shareholders buying NaimStock at its initial offer price on 12th September 2003 have seentheir investment grow from RM1.30 per share to RM4.18 pershare (April 19th 2007). This compares favourably to RM3.14 pershare in April 2006, when our results were ostensibly better, andsuggests that investors are taking a very positive view of ourlong term prospects.
Taking into account this substantial increase in share price, aswell as the four dividends of 9.0 sen (2003), 12.0 sen (2004),12.0 sen (2005) and 15.0 sen (2006), shareholders haveenjoyed a financial gain of RM3.36 per share, a 260%return on their initial investment, in just over 42months.
Corporate Governance
The Board of Directors has long recognised the importance ofcorporate governance in not only adding shareholder value butalso protecting the rights and interests of shareholders for thebenefit of all. Therefore we continuously benchmark and manage
Fortunately, there are positive as well as negative consequencesresulting from the aforementioned factors. The two delayedprojects involved design and land acquisition issues which theGroup had been working hard to resolve in close partnership withthe Sarawak State Government. Both projects are expected tocommence in the near future and contribute to revenues for2007, and overall contract value has increased due to the designrevisions involved. A number of events have also occurred whichwill have direct positive impacts for the immediate and long termgrowth of the Sarawak property market, most important of whichare the exemption from Real Capital Gains Tax granted to propertyowners, and the introduction of a mandatory Code of Practiceby the Sarawak Housing and Real Estate Developers Association(see Prospects, below)
Dividends
The board is not recommending a Final Dividend for the financialyear ended 31 December 2006. The Interim Dividend (15 senper share before tax) already declared and paid represent adistribution to Shareholders of RM26.405 million after tax, or39.85% of the Group’s profits for the year ended 31 December2006. The dividend yield is 4.81% based on the year-end shareprice of RM3.12 and in the Board’s opinion offers adequateshort term financial returns for our investors whilst maintainingreasonable cash reserves for future growth, including expansionof the land bank, expansion and upgrading of plant, and otherinvestments outlined in Prospects, below.
message to our shareholders
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
17
governance activities and requirements as a key component ofthe overall value creation process. Unfortunately, in the shortterm at least, good governance is not always recognised by thebusiness community or the public at large. However, the recentemergence of external governance rating agencies has made itpossible to measure the degree to which the Naim Group complieswith best practices in governance, and we are delighted todiscover the virtue of good governance does indeed have itsown rewards.
In the joint study by Minority Shareholder Watchdog Group andthe University of Nottingham Business School in its 2006 CorporateGovernance Survey Report, Naim was ranked first amongstSarawak-based public listed companies and secondoverall in the property sector, and in the top 10% overallfor companies listed on Bursa Malaysia fordemonstrating best practices in Corporate Governance.We are of course delighted, but will only be satisfied when weare ranked No.1 overall, and will ceaselessly continue our effortsaccordingly.
Prospects for 2007 and Beyond
The Economic and Political Background
The Sarawak economy is expected to enjoy stable marketconditions throughout the coming financial year. Continuingconfidence in the Malaysian economy, combined with an absence
of destabilizing factors, such as epidemics and regional conflicts,should contribute to solid buyer confidence. Sarawak will continueto enjoy one of the fastest growing economies in the region, andcontinued political stability both at Federal and State Governmentlevels are likely to contribute to a buoyant property market inSarawak. Similarly, the ongoing implementation of the 9th MalaysiaPlan (9MP) will provide abundant opportunities for the constructionsector, as well as contributing to the overall growth of theeconomy.
Property Division
The Group has been aggressively expanding its land bank and isclose to concluding the acquisition of six strategically locatedland packages in fast-growing urban areas, with a total area ofapproximately 660 acres. Using conservative calculations, thisrepresents potentially a possible GDV of an estimated RM1.7billion. Upon concluding the acquisitions of those land packagesthis will add to the Group’s existing 2,400 acre land bank with itsestimated GDV of RM3.1 billion, the Group now has a land bankof 3,100 acres with a total estimated GDV of RM4.8 billion.
This expanded land bank will allow the Group to further strengthenits position as Sarawak’s leading developer. According to leadingproperty consultants CH Williams Talhar Wong and Yeo Sdn Bhd,the average annual demand for new residential properties inSarawak will be around 15,800 per annum between now and2010. In the Group’s target markets, this breaks down into 5,200new homes per annum in the Kuching/Samarahan area, 2,800new homes per annum in the Bintulu area, and 2,700 new homesper annum in the Miri area. The Group’s own projections suggestthat it can capture at least 3,000 of the 5,200-unit annual demandin Kuching, 2,000 of the 2,700 demand in Miri, and 1,000 additional
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homes in Bintulu, i.e. the construction and sale of over 6,000new homes per annum by 2012. It is also worth noting that theseprojections are achievable even without increasing the Group’shistoric 39.65% share of the Sarawak property market (1997-2004, WTWY Property Report 2005).
Confidence-Boosting Factors
The Group continues to have great confidence in Sarawak’sproperty market, for a variety of reasons, of which four standout as being the most significant.
1. Population Growth:Sarawak’s young, ambitious and upwardly mobile populationis growing at between 3% and 5% per annum in urban areasand 2.5% overall, fuelled not only by a high birth rate, butalso by substantial urban-rural migration as the state developsand industrializes (sources: Population & Housing CensusReport, 9th Malaysia Plan). As a result, the state has thethird highest level of overall housing requirements in Malaysia,at 65,000 units between 2006 and 2010. The only stateswith greater housing needs, namely Selangor and Johor,have far larger populations and thus Sarawak enjoys thehighest per-capita demand of the three (sources: 9MP, CreditSuisse)
2. Spin-Offs from Major-Projects:A number of major infrastructure projects - including theBakun Hydro Dam and other proposed hydro projects,Malaysia’s largest pulp and paper mill, and a proposed
aluminium smelter, as well as the dramatic expansion of theoil and gas industry – should not merely provide secure andwell-paying jobs for potential home buyers. They should alsoinvolve huge capital injections into the state’s economy,enriching local entrepreneurs across a wide range ofcategories and providing liquid cash for property and realestate investment.
3. Exemption from Real Property Gains Tax (RPGT)The Ministry of Finance has granted all property owners -both individuals and corporations – full exemption from RPGTeffective 1st April 2007. This measure has been warmlywelcomed by the entire property and construction sector,and is likely to have a powerful impact on buyer confidence.Investors buying to let will only be taxed on their rentalincomes, which can be offset against investment costs, andthus buy-to-let will become an increasingly attractiveinvestment. Additionally, expatriates and Malaysia My SecondHome participants, who usually prefer higher valueaccommodation, will find the prospect of buying rather thanrenting their homes increasingly attractive.
4. Introduction of SHEDA Code of PracticeThe introduction of a mandatory Code of Practice (CoP) bySHEDA (the Sarawak Housing and Real Estate DevelopersAssociation) is a first for Malaysia and is designed to promotethe best practices in all stages of housing and real estatedevelopment and delivery, to the full satisfaction of housebuyers and end users. The CoP insists that developers areaccountable and responsible, sets out guidelines to ensure
message to our shareholders
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
19
that a high standard of work is delivered, and includesmechanisms for mediation and arbitration, the right to strikeout the membership of errant members, and recommendationsto the Housing Ministry to revoke the license of any errantmember. Thus the CoP will guarantee the commercial conductand ethics of the housing industry, portray developers asresponsible and trustworthy, further improve the integrityof the industry and – most importantly – increase buyerconfidence.
The CoP offers a further benefit to the Naim Group – itstrengthens our competitive position. The reason is that wehave always voluntarily adhered to the standards andpractices required by the CoP, as in our opinion it reflectsgood and ethical business practice, and therefore we willincur no cost increases as a result of the introduction of theCoP. However, many of our competitors may have to increaseprices and/or reduce margins in order to meet the CoP’srequirements.
Developing Property Investment Opportunities
To reflect this confidence, and to further capitalize on its positionas Sarawak’s No. 1 developer, the Group also plans to move intoproperty investment throughout and beyond Sarawak. This willenable the Group to position itself not only as Sarawak’s leadingdeveloper, but also as a genuine one-stop property shop, offeringits customers a complete spectrum of property-related productsand services, including real estate investment trusts (REITs).
Construction Division
The Group is also confident of increased growth and profitabilityin its construction and civil engineering activities, again for avariety of compelling reasons. For example, the delay in theBengoh Dam project has led to the issue of a new Letter ofIntent by the State Government, upgrading the contract to Designand Build. This will increase the overall contract value, and willalso put the Group in a better position in the implementation andmanagement of the project. The Group’s ongoing projects (witha total value of almost RM1.6 billion) continue to hit theirrespective targets either on schedule or ahead of schedule, andare expected to contribute to profits as previously forecast.These ongoing projects will also allow the Group to establish animportant milestone - a grand total of RM1 billion of externalcontracts completed by June 2007 (not including internal housingconstruction for our development projects). Work has also startedon the RM620 million Syarikat Perumahan Nasional Berhad housingproject with sites in Kuching, Kota Samarahan and Miri, which isexpected to contribute to profits starting this year.
20
For the medium term, the Group’s profits should be boosted by anumber of major new contracts. The most important of these isthe Kuching Flood Mitigation Scheme for the Drainage andIrrigation Department, Sarawak, for which a Letter of Intent hasbeen received. According to the project design consultants, thescheme is likely to have a total aggregate contract value in theregion of RM1.6 billion (including land acquisition element),although it may be implemented in stages depending on statefunding priorities and other considerations. With the award ofthis project, the Group’s total order book now stands at overRM3.5 billion. In order to secure construction revenues and profitsfor the longer term, the Group is currently bidding for variousmajor infrastructure projects, including oil and gas industry relatedprojects, whose estimated value is RM6.0 billion over the nextfive years.
NOTE:The order book value of RM3.5 billion given above includesprojects at the Letter of Intent (LOI) stage. Given its past trackrecord and experience, the Group is very confident that theseLOIs will become firm orders, although this cannot be guaranteed.
message to our shareholders
Exploring Opportunities in Oil and Gas
The Group is seeking to significantly diversify beyond mainstreamgovernment contracting and establish its presence in the rapidlyexpanding oil and gas sector. This is being done in order tofurther increase the long-term value of its construction and civilengineering activities, as well as to minimize business risksassociated with a comparatively narrow client base. The Grouphas set up a new Oil and Gas Division headed by its Senior Headof Construction, Mr Gordon Kab, who has more than 15 yearsexperience as a senior project manager and technical consultantwith Shell Malaysia. The Group has already achieved the statusof a Petronas-licensed contractor (Major Construction and CivilWorks), and has since then upgraded this license to include M&E.
The Group has also formed a consortium withinternational pipeline fabrication specialists includingthe world-renowned NACAP Group, which has already pre-qualified (along with four other consortia) to bid for the upcomingSabah-Bintulu Gas Pipeline project. This is a turnkey EPCC projectwith a project value estimated at RM1.8 billion, whereby NACAPGroup would provide the pipeline fabrication and implementationexpertise and Naim Group would provide the civil workscomponent, as well as its in-depth knowledge and experience oflocal conditions.
The Group stands to benefit from the civil, infrastructure,engineering, water supply and privatisation contracts awardedor to be awarded under the Ninth Malaysia Plan, worthapproximately RM25 billion. Thus it is slated to become the growth
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
21
driver for the group during the Ninth Malaysia Plan period (2006-2010) and will gradually become the biggest contributor to thegroup’s turnover and PAT.
Corporate Image and Public Profile
The Group will be embarking on a comprehensive corporatecommunication and brand-building exercise which is expected tobear fruit in the coming year. Of the various initiatives and activitiesplanned, probably the most important will be the opening of anew representative office in Kuala Lumpur in the second half ofthis year.
Management Restructuring
The Group has become increasingly aware of the importance ofconsistent professional leadership and of having a clearprogramme of management succession. Therefore it has takenthe decision to appoint a new Deputy Managing Director, DrSharifuddin Bin Abdul Wahab, to strengthen its managementteam and prepare for the next level of growth. Dr. Sharifuddin isnot a stranger to the Naim Group as he has been serving theGroup as an Independent Non-Executive director since 2003.His intimate knowledge of the Group has significantly enabledhim to ease into his senior executive management position without
much need for a challenging transitional period. He is a corporatefigure and hands-on leader of the highest calibre.
To ensure continuity and to build on existing achievements, DrSharifuddin will be ably assisted and supported by the Group’scurrent team of Executive Directors and Senior Managers. Theyinclude Ir Suyanto Osman (Senior Executive Director, Constructionand Business Development), Ahmad Abu Bakar (Senior ExecutiveDirector, Finance and Operations), Gordon Kab (Senior Head ofConstruction), Vincent Kueh (Senior Executive Director, Property)and Radzali bin Alison (Head of Property Investment andOverseas Business).
Anticipated Results
Based on the activities, initiatives and market conditions outlinedabove, and barring any unforeseen circumstances beyond theGroup’s control, the Group is confident of achieving favourableresults for 2007 and beyond.
Acknowledgements
We would like to convey our sincerest thanks to our fellowdirectors and all the employees of Naim Group for their hard workand professionalism. We would also like to thank all the State andFederal Government Ministries, Departments, Statutory Bodiesand Regulatory Agencies who have offered us such closecooperation and support during 2006. Heartfelt thanks are alsodue to our joint venture partners, sub-contractors, consultants,professional advisors and service providers, whose unstintingefforts have helped our Group to perform so well.
22
message to our shareholders
However, we reserve our warmest and special thanks for ourfellow shareholders. Whether you are large institutional investorsworking on behalf of millions, or small investors seeking to secureyour retirement years or your children’s education, we valueevery single Ringgit and Sen you have invested in our Group. Weare delighted that you have given us and will continue to give usthe opportunity to reward your strong faith in our abilities toreturn the values which we are proud to maintain.
Finally, we would like to offer a special word of thanks to ourcustomers - the various Government Departments who haveentrusted us with key infrastructure and public housing projects,and the thousands of ordinary Malaysians who have bought
their homes from us. You have not only contributed to our financialsuccess, you have also helped to make Sarawak a better placeto live, by endowing the state with first class infrastructure, andby transforming our development projects into vibrant living andloving communities.
Thank you
Datuk Abdul Hamed Bin Haji SepawiNon-Executive Chairman
Datuk Hasmi Bin HasnanManaging Director
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
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review of operations
Property Operations
Reviewed by Vincent Kueh Hoi Chuang, Executive Director, Headof Property Division
During the financial year we sold RM194.7 million worthof residential and commercial properties inspite of thegeneral softening of the property market in Sarawak, althoughsome operations in and around Kuching continued to performabove expectations. Individual development projects arediscussed in detail below.
Bandar Baru Permyjaya
The integrated satellite township of Bandar Baru Permyjaya inMiri continues to be one of the most popular and successfulsuburban developments in Malaysia, and was once again ourlargest single property revenue earner. During the year in review703 homes and commercial properties were sold to a value ofRM127.44 million, despite the softening of the Sarawak propertymarket affecting not only Naim but also our competitors in thestate. In the first quarter of 2007 Bandar Baru Permyjayaachieved improved sales, indicating that the market is on theway back to its buoyant best, and that we are likely to enjoy amore successful year.
Desa Ilmu
Desa Ilmu, the largest integrated development in Kota Samarahan,Kuching’s hi-tech satellite town, has been an excellent performerbut is now gradually reaching completion, so sales are thereforereducing on a year-by-year basis. Nevertheless we achievedsales of 110 units at a total value of RM19.3 million.
Rock Commercial Centre
Launched in 2005, this 2.4-acre commercial development in oneof central Kuching’s busiest and most attractive locations,comprises 17 shophouses and a large stand-alone retail spacefor an anchor tenant. At the initial sales launch we sold 6shophouse units at premium prices for a total value of RM7.13million, although no further units were sold in 2006, as we wereunwilling to reduce prices given the appreciating value of theunsold properties. Further premium price sales are anticipatedduring the coming year
Riveria
Located at the heart of Kuching’s popular southern corridor, on100 acres of attractive river frontage directly adjacent to theKuching-Kota Samarahan highway, Riveria was our star performerin 2006. Riveria has been popular with buyers since its launch in2005 as the area is already well established through existingdevelopments such as the Tabuan area and Stutong Jaya, and agreat deal of infrastructure, social and educational amenitiesand major employers are already in place. During 2006 we sold181 units to a total value of RM41.52 million. This continuingsuccess reinforces our belief that Riveria is on track to becomeone of the most successful developments in our portfolio.
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Kuching - Exclusive Residential Development
We continued planning work on a 4.7 acre development at JalanBukitan which will offer high quality homes in the upper-middleprice bracket. Work will commence when the ongoing developmentplanning is completed.
Desa Labang
Currently at the planning stage, Desa Labang is one of the keyassets for the Group’s future growth. This huge land package ofover 1,000 acres is ideally positioned to meet the growing housingneeds of Bintulu, Sarawak’s industrial powerhouse. With continuinggrowth in the petrochemical industry, plus a number of mega-projects slated over the next decade, housing demand in Bintuluis set to grow rapidly, and buyer incomes are likely to increaseaccordingly.
Construction Operations
Reviewed by Gordon Kab, Senior Head of Construction
This has been an excellent year for the constructiondivision. For the first time in the Group’s history,construction revenues are marginally greater thanproperty revenues at RM258 million, or 52% of theoverall total. This was achieved despite the unavoidable delaysin the implementation of the Bengoh Dam and Kuching FloodMitigation projects (see Message to Shareholders), andcongratulations are due to everybody involved for theircommendable efforts. I am also pleased to announce that all ourconstruction operations now enjoy full ISO9001:2000certification, further underscoring our reputation for quality. A
brief review of the individual projects follows.
Completed Projects
Projects completed during 2006 had a combined valueof RM45.3 million and I am delighted to note that, inthe best Naim tradition, all were completed on time orahead of schedule.
Cadangan Pembangunan Institut Latihan Perindustrian(ILP) Miri (Phase 2 Stage 1)This turnkey project rounded off the construction of this majorvocational training institute. We had already completed Phase 1in 2005, for which we received the coveted Builder of the YearAward. This RM33 million project for the Manpower Departmentof the Ministry of Human Resources involved the construction ofthe various support facilities for ILP Miri, and was completedahead of schedule on 28th December 2006.
Balingian to Tatau / Bintulu Road, MukahThis RM14.4 million project for Jabatan Kerya Raya Sarawak,designed to unlock the potential of Sarawak’s fast-developingcentral coastal region, involved the use of entirely new designformulas and methods to save time and improve road quality. Wewere particularly concerned with driver safety, and devoted agreat deal of effort to smoothing out difficult bends and improvingroad cambers to give users a safe and enjoyable drivingexperience. The project was completed on 31st October 2006, aremarkable 10 months ahead of schedule.
Ongoing Projects
As of December 2006, RM1.6 billion worth of projects were under
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construction, and all were progressing on target or ahead ofschedule.
Batang Balingian BridgeThis design and build project for the Government of Sarawak,due for completion in June 2008, was 94% complete at the endof April 2007. We attribute this shortened construction period toan innovative new incremental launching method and speciallydesigned cast-in-situ construction joints. We were also able toreduce overall cost, and make a contribution towards conservingthe environment, by using scrap vehicle tyres as the foundationmaterial for the approach roads.
Police General Operations Force Camp, KuchingThis turnkey project for the Ministry of Internal Security comprisesevery component of a major operational, training and residentialcomplex for the 700-strong Police General Operations Forcecontingent in Kuching. The project, located on a 250-acre site,involves the construction of a self-contained community ofresidential, administrative and support buildings, complete withtelecommunications and network infrastructure. The project isproceeding smoothly and is already 50% complete, which puts itwell ahead of schedule to achieve its target completion date ofMarch 2008.
Kuching-Sibu Road Upgrading (from Julau Junction toSibu Airport Junction)This project, a key section of the Trans Borneo Highway, involves
road widening and upgrading works in some of Sarawak’s mostchallenging terrain. At the end of March 2007, the project wasover 31% complete, well ahead of schedule to achieve itstargeted delivery date of September 2009.
New Dewan Undangan Negeri (DUN) ComplexThe future seat of Sarawak’s State Government is a 45/55 jointventure with PPES Works Sdn Bhd. At the time of writing,construction of this state-of-the-art building is on schedule fortimely completion in September 2007.
Kompleks CIQ, LimbangThe Limbang Customs, Immigration and Quarantine Complex forthe Ministry of Home Affairs represents a departure from ourusual strategy of targeting negotiated contracts. Our successfultender for this project indicates that we are as competitive oncost management as we are on quality and timely delivery. Italso allows us to showcase the quality of our work to the largenumber of international travelers passing between Malaysia andBrunei. At the end of March 2007, the project was 28.5%complete, and is scheduled for timely completion in January 2008.
Maktab Rendah Sains MARA (MARA Junior ScienceCollege), MukahThe result of another successful competitive tender, we were
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awarded this project in early 2006. It comprises construction ofa main academic block, an administrative block, a multi-purposehall, laboratories, libraries, workshops, student hostels, staffquarters and social and religious facilities, laid out in four distinctzones. The original project period was very tight, at only 24months for a greenfield site, but we commenced work ahead ofschedule, and implemented a multi-staging surcharge processfor the earthworks, allowing actual construction to commence3½ months ahead of schedule. The project is scheduled forcompletion in April 2008.
Cadangan Pembangunan Institut Latihan Perindustrian(ILP) Miri (Phase 2 Stage 2)This project brings to a conclusion the highly successful ILP Miricontract (see Completed Projects, above) and involves the supply,delivery, installation, testing and commissioning of high-technology training and industrial equipment for the Institute’sworkshops and training centres. This contract is the firstprocurement and implementation project awarded to the NaimGroup and was 70% complete at the end of March 2007, wellwithin schedule for handover in August of this year.
SPNB Desa Bahagia, MiriThe largest of three turnkey projects for Syarikat PerumahanNegara Berhad (SPNB), the Desa Bahagia project involves theconstruction of 2,703 residential and commercial units, comprising
single-storey terraced, semi-detached and detached homes aswell as double storey shophouses. One of very few low-densitypublic housing schemes in Malaysia, Desa Bahagia’s affordablemedium-cost homes are designed to offer lower income earnersan excellent quality of life, in line with the Naim Group’s philosophyof building not simply houses but vibrant living communities.
SPNB Desa Ilmu, Kota SamarahanAnother SPNB project offering quality urban homes for lowerincome earners, SPNB Desa Ilmu comprises 1,152 walk-upapartments, as well as a Surau and Multipurpose Hall.
SPNB Sultan Tengah, KuchingA mixed development of almost 2,000 residential houses andcommercial shoplots, complete with ancillary buildings andsupporting infrastructure, this design and built project is currentlyat the site clearing and earth filling stage, pending plan approvalfrom the client before actual construction proceeds.
Future Projects
In order to avoid speculation and present a realistic order bookvaluation to shareholders, we have chosen to confine our
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descriptions of future projects to those which we have alreadyreceived a Letter of Intent (LOI) and/or further substantiatingdocuments from the client(s). Any other projects for which weare currently bidding will be only be announced once they areprovisionally awarded. At the time of writing, there arethree major projects at the LOI stage.
Upgrading of Mukah Access RoadProviding fast and direct access to one of Sarawak’s fastestgrowing regions, this project for Jabatan Kerja Raya (JKR)Sarawak will release the economic potential of Sarawak’s coastalheartland when completed in May 2010. We anticipatecommencing work on this 52km road project in May 2007. As wellas extensive straightening and flattening of the existing road toprovide a safe and pleasant driving experience, the project alsoinvolves the laying of a main water pipeline along the length ofthe road.
Construction of Bengoh Dam, KuchingOnce completed, this 63 metre high by 267 metre long dam willhave a capacity of 144 million cubic metres (1m3 = 1,000kg or 1tonne) and will produce a lake with a surface area of approximately
10km2. Designed to secure Kuching’s water supply for theforeseeable future, the dam will be only the second in Malaysiato be constructed using Roller Compacted Concrete (RCC)technology, which offers a projected service life of 100 years.The package also includes ancillary buildings, infrastructure andassociated works, and resettlement of the affected communities.
Flood Mitigation Works, KuchingThis project is currently at the preliminary study and design stage,and thus the precise contract value can only be fixed followingthe Letter of Acceptance from the Federal Government. Ourrevised design takes a holistic approach to floodwatermanagement, with a bypass channel capable of dealing withcatastrophic, once-in-a-century flood events.
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Management and Administrative Operations
Reviewed by Dr Sharifuddin Abdul Wahab, Deputy ManagingDirector
Quality
Quality is the ultimate criterion by which our business success isjudged, and therefore quality is “first amongst equals” in termsof our business development and corporate re-engineeringpriorities. We already owe a great deal of our success to excellentquality management, and the subsequent delivery of top qualityproducts and services, a fact that is acknowledged by a string ofquality awards over the last few years.
Our recently established Quality Division has been very proactivein moving quality to the forefront of the corporate agenda. Aswell as auditing and reviewing our existing ISO 9002 accreditation,it has helped us obtain our new ISO9001:2000 certification forthe Construction Division, and has been working on 2-year QualityPlan to achieve ISO 1801 (Safety) and ISO 14001 (Environmental)accreditations by the end or 2007.
The following Quality and Capability accreditations andregistrations apply to our 100% owned operating subsidiary,Naim Cendera Sdn Bhd.
ISO 9001 and 9002 Accreditation by Moody InternationalCertification Ltd and ACQC Moody (Malaysia) Sdn BhdPusat Khidmat Kontraktor Negeri Sarawak (PKK) underClass AUnit Pendaftaran Kontraktor Negeri Sarawak (UPK) underClass A
Construction Industry Development Board (CIDB) underGrade 7
The following Quality and Capability accreditation and registrationprocesses are under way as part of our 2-year Quality Plan, andare expected to be awarded before the end of 2007.
ISO 1801 (Safety)ISO 14001 (Environmental)
Health and Safety
Work-related illnesses and accidents delay projects, damagestructures and equipment, and most importantly they cause injury,pain and suffering to people. Therefore health and safety are ofoverriding concern to the directors, management and staff onthe Naim Group. Our rigorously enforced Healthy Workplace andZero Accident Policies once again yielded positive results, withno work-related illnesses or accidents being reported for theyear in review.
Information Technology
The adoption of new and emerging technologies gives the NaimGroup a valuable competitive edge. It allows us to manage projectsmore effectively and to construct better homes, buildings andinfrastructure. For this reason we devised a 5-year IT Plan in2004, which has been steadily implemented throughout the yearin review, with a total of RM3.3 million invested in infrastructureupgrades.
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All projects are now managed using cutting-edge Primaveraproject management software; our property sales, marketingand management activities are run using IFCA Property Plus,and we have invested in Lotus Notes Domino Server to enable usto develop collaborative systems throughout the organization.We are also evaluating and assessing workflow managementapplications and land administration systems. On the systemsand hardware front we now have more than half a terabyte ofstorage capacity serving a group-wide intranet, which we areextending to the remotest locations using V-Sat technology.
To ensure successful adoption and buy-in by IT users, we areconducting change management programmes which focus onenabling and empowering all or our employees. As a result, weare now able to provide a comprehensive range of IT services toour staff, our customers, our suppliers and our subcontractors,including the following:
Sub-contractor managementDirect labour managementPlant and equipment managementQuantity surveying for tendersFinancial and accounting servicesSpam controlEnhanced network securityOnline house sales and booking (by mid-2007)Virtual walk-throughs of properties (by mid-2007)
Business Process Re-Engineering
Our Business Process Re-Engineering Programme, introduced in2005, continued to be the focus of our corporate priorities, Thisexercise involves identifying, evaluating and documenting eachand every process used in the course of our business, thenstreamlining and integrating these processes to optimiseefficiency, effectiveness, responsiveness and flexibility. Our ITsystems and workflow management are currently being re-alignedto fit the precise needs of the organisation and all the individualsworking within it (rather than vice versa), to maximize useradoption and buy-in. This exercise is being implemented to fullyprepare ourselves for whatever challenges the future may holdfor us, as we look forward to a successful long-term future ofhyper-productivity and enhanced profitability.
Human Resources
Our 500-plus workforce continues to be our most important asset,and throughout the year we carried out our ongoing programmeof human resource development to ensure that we recruit andretain people who share the Group’s vision, goals and objectives,and who also share fairly and equably in the results of theirperformance and our ultimate success.
board of directors
30
Prior to the Naim Group’s listing he was Non-Executive Chairman of Naim Cendera Sdn. Bhd. (since 12 October 1995). He received his early education at St. Columba’s School, Miri and Malay College, Kuala Kangsar. He graduated with a BSc (Hons) from University of Malaya in 1971, pursued undergraduate studies in forestry at the Australia National University from 1974 to 1975, and later obtained an MSc in Forest Products from Oregon State University, USA.
Whilst remaining active in the timber and plantation industries, Datuk Abdul Hamed developed his career around his keen personal interest in the construction sector, which was first acquired through school vacation jobs in Miri. For more than 28 years, he has been active as an investor, a manager and a director in companies carrying out civil works, offshore engineering, construction, housing, and property development.
He was a member of the National Economic Consultative Council II and sits on the board of Sarawak Timber Industry Development Corporation, a state statutory body in Sarawak. He is also the Executive Chairman of Ta Ann Holdings Berhad and Chairman of Sarawak Enterprise Corporation Berhad, companies listed on Bursa Malaysia Securities Berhad. He is also a director of Sarawak Plantation Berhad, a non-listed public company.
Non-Executive ChairmanDatuk Abdul Hamed Bin Haji Sepawi
ChairmanBoard Executive Committee
Nomination Committee
Business Development Committee
Prior to the Naim Group’s listing he was Non-Executive Chairman of Naim Cendera Sdn. Bhd. (since 12 October 1995). He received his early education at St. Columba’s School, Miri and Malay College, Kuala Kangsar. He
Non-Executive ChairmanDatuk Abdul Hamed Bin Haji Sepawi
ChairmanBoard Executive Committee
Nomination Committee
Business Development Committee
Datuk Abdul Hamed
Bin Haji Sepawi,
aged 58, was appointed as
Non-Executive Chairman of
Naim Cendera Holdings
Berhad on 25th July 2003.
He was appointed Managing Director of Naim Cendera Holdings Berhad on 25th July 2003. He graduated in Estate Management from the London South Bank University, UK in 1978. He is a member of the Malaysia Institution of Surveyors, a Senior Certified Valuer with International Real Estate Institute, USA and a member of FIABCI.
He began his career in 1979 as a valuer in the Land and Survey Department of Sarawak. Since 1982, he has been involved in a wide range of businesses, including valuation, project management, property development and management, construction, timber, manufacturing, trading and publishing. In June 1993 he became the Managing Director of Naim Cendera Sdn. Bhd. and has since been the main driving force behind the company’s growth and expansion.
He is also director of 2 non-listed public companies, Sarawak Plantation Berhad and Naim Incorporated Berhad.
Datuk Hasmi Bin Hasnan,
aged 54, is the founder
of Naim Cendera Sdn. Bhd.,
a wholly-owned subsidiary of Naim
Cendera Holdings Berhad.
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Managing Director Datuk Hasmi Bin Hasnan
ChairmanRisk Management Committee
MemberAudit CommitteeBoard Executive CommitteeRemuneration CommitteeHuman Resource Operations CommitteeBusiness Development Committee Business Process Engineering CommitteeCorporate Disclosure Committee
Datuk Hasmi Bin Hasnan,
aged 54, is the founder
of Naim Cendera Sdn. Bhd.,
a wholly-owned subsidiary of Naim
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32
Deputy Managing Director Dr. Sharifuddin Bin Abdul Wahab (redesignated from Independent Non-Executive Director to Deputy Managing Director on 26 February 2007)
ChairmanHuman Resource Operations Committee
Member Business Development CommitteeBoard Executive CommitteeBusiness Process Engineering CommitteeRisk Management CommitteeCorporate Disclosure Committee (appointed member of the above 5 committees on 27 April 2007)Remuneration Committee(resigned as member of Remuneration Committee on 26 February 2007)Audit Committee (resigned as member of the Audit Committee on 26 February 2007)
Dr. Sharifuddin Bin Abdul Wahab, aged 51, was appointed Independent Non-Executive Director on 25th July 2003 and was redesignated to Deputy Managing Director on 26th February 2007. He graduated with a Doctor of Veterinary Medicine degree from the University of Agriculture, Faisalabad, Pakistan in 1981. He then pursued his postgraduate studies and obtained his Masters Degree in Science from Universiti Pertanian Malaysia in 1983. He also holds a certificate in RIA techniques from Cornell University, United States of America.He began his career in the education field as a lecturer in Universiti Pertanian Malaysia in 1982 and was active in various research and development activities. He was awarded research grants from the International Atomic Energy Agency (IAEA) Vienna, Commonwealth Scientific and Industrial Research Organisation (CSIRO) Australia and later appointed as expert for Africa and South East Asia by the IAEA. He joined Schmidt Group from 1989-2007 and successfully restructured the Biomedical business in Malaysia. He was then appointed Executive Director of Schmidt Vietnam Co Ltd from 1995 – 1998 and later in 1999 was promoted to the position of Regional Managing Director. He was also the Chief Executive Officer of Schmidt BioMedTech Asia Ltd., a multinational company with presence in over ten countries in Asia. He left Schmidt BioMedTech Asia Ltd on 15th February 2007, and was re-appointed as an Independent Director for Schmidt BioMedTech Asia Ltd. on 26th February 2007. He also holds directorships in several private limited companies.
Executive Director Ahmad Bin Abu BakarMemberBoard Executive Committee
Risk Management Committee Human Resource Operations Committee Business Process Engineering Committee Corporate Disclosure Committee (appointed member of the above 4 Committees on 28 April 2006)
Ahmad Bin Abu Bakar, aged 53, was appointed Executive Director of Naim Cendera Holdings Berhad on 6 February 2006. He is a member of both the Chartered Association of Certified Accountants (ACCA) and the Malaysian Institute of Accountants (MIA). He is principally responsible for overseeing the financial management and operations of the Group.
Prior to joining the Group, he held senior positions, amongst others are Group Financial Controller/Director, Executive Director – Operations, Chief Operating Officer/Director, in other multinational companies. He has worked for Malaysia Credit Finance Berhad, Fima Metal Box Bhd, DMIB Berhad, Sime Darby Group, Land and General Berhad. He has considerable experience in the finance, hotel, plantation, construction and property development industries.
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Executive DirectorIr. Suyanto Bin Osman
Member Board Executive Committee
Risk Management Committee
Business Development Committee
Business Process Engineering Committee
Ir. Suyanto Bin Osman, aged 49, was appointed Executive Director of Naim Cendera Holdings Berhad on 25th July 2003. He is responsible for the overall performance of the business development and construction of the Group. He holds a BSc in Civil Engineering from the University of Manchester Institute of Science & Technology, UK. He is a registered Professional Engineer with the Board of Engineers, Malaysia and also a member of the Institution of Engineers Malaysia and the Project Management Institute (PMI).
He started his career as an Engineer with the Public Works Department from 1981 to 1987. In 1988, he joined Dewan Bandaraya Kuching Utara (DBKU) as Deputy Director where he was responsible for the overall control of the planning and development of Kuching City, Sarawak. He later joined HAPM Consultant in 1995 as Executive Director where he was the Project Director of various mega-projects including the 77 Storey Headquarters Building of Telekom Malaysia (RM700 million), the Bakun Resettlement Scheme (RM300 million), Multimedia University Cyberjaya (RM350 million) and University Malaysia Sarawak (RM1 billion). He joined wholly-owned subsidiary Naim Cendera Sdn. Bhd. in April 2003.
Executive DirectorKueh Hoi Chuang
MemberRisk Management Committee
Human Resource Operations Committee
Business Development Committee
Business Process Engineering Committee
Mr. Kueh Hoi Chuang, aged 51, was appointed Executive Director of Naim Cendera Holdings Berhad on 25th July 2003. He holds a Bachelor of Arts degree from the University of Guelph, Canada, and is a member of the Institute of Approved Company Secretaries. Mr Kueh has been involved in the property and construction industry since his graduation in 1983. He was initially employed by Custodev Sdn. Bhd., where he specialized in property management, development and construction. He joined wholly-owned subsidiary Naim Cendera Sdn. Bhd in 1993 and rapidly rose through the ranks. He currently heads the Naim Group’s property division, responsible for the development of the Group’s flagship projects at Bandar Baru Permyjaya in Miri, and Desa Ilmu and Riveria in Kota Samarahan. He also has extensive sales and marketing experience in properties developed under his leadership.
He is also a director of Naim Incorporated Berhad, a non-listed public company.
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board of directors
Executive Director Abang Hasni Bin Abang Hasnan
Encik Abang Hasni Bin Abang Hasnan, aged 56, was appointed Executive Director of Naim Cendera Holdings Berhad on 25th July 2003. He received his early education in Government Secondary School, Kanowit and later pursued studies in carpentry and joinery and obtained a Certificate from City & Guilds of London Institute. In 1972 he attended a technical course in wood processing and mechanical and engineering equipment at British Columbia Institute of Technology, Canada.
From 1967 to 1983 he worked as an Instructor to the Forest Department, Kuching. From 1983 to 1988 he joined Equatorial Timber Moulding Sdn. Bhd. as Assistant Factory Manager. Thereafter he was employed as Production, Research & Development Manager by Gegasan Sdn. Bhd., a company involved in timber related business. In January 1997 he joined Naim Cendera Sdn. Bhd.
Executive Director Abang Hasni Bin Abang Hasnan
Encik Abang Hasni Bin Abang Hasnan, aged 56, was
Non-Executive Director Ir. Abang Jemat Abang Bujang
Chairman
Remuneration Committee
Business Process Engineering Committee
Member Human Resource Operations Committee
Ir. Abang Jemat Abang Bujang, aged 54, was appointed Independent Non-Executive Director on 25th July 2003. Presently he is Non-Executive Director. He holds a Bachelor of Engineering (Electrical) from Newcastle University, New South Wales, Australia. He is a registered Professional Engineer with Board of Engineers, Malaysia and also a member of the Institution of Engineer, Malaysia. He was awarded the Pingat Perkhidmatan Bakti (PPB) in 1997.
He joined Telekom Sarawak as a Telecommunication Engineer from 1979 to 1986 and assumed the post of Director from 1987 to 1990. He was the General Manager of Telekom Malaysia from 1995 to 1999. He joined TM Cellular Sdn. Bhd. as Chief Executive Officer from 1999 to 2000. He is currently the Managing Director and Chief Executive Officer of Sacofa Sdn. Bhd.
Senior Independent Non-Executive DirectorYB Tuan Haji Hamden Bin Haji Ahmad
ChairmanAudit Committee
MemberNomination Committee
Risk Management Committee
YB Tuan Haji Hamden Bin Haji Ahmad, aged 59, was appointed Independent Non-Executive Director on 25th July 2003. He is a Chartered Accountant and obtained his membership of the Association of Chartered and Certified Accountants (ACCA) from the London School of Accountancy, United Kingdom in 1979. He is a Fellow member of ACCA.
He started his career as a Chief Accountant attached to Sarawak Land Development Board, Sarawak from 1978 to 1982. He later set up his own accounting firm, Hamden Kiu dan Rakan Rakan, in 1983. Currently he is an elected member of Dewan Undangan Negeri Sarawak and holds directorships in several private limited companies. He is Director of BLD Plantation Berhad, a company listed on Bursa Malaysia Securities.
Independent Non-Executive DirectorDatu Haji Abdul Rashid Bin Mohd Azis
MemberAudit Committee
Nomination Committee
Human Resource Operations Committee (appointed member of Human Resource Operations Committee on 28th April 2006)
Remuneration Committee (appointed member of Remuneration Committee on 27th April 2007)
Datu Haji Abdul Rashid Bin Mohd Azis, aged 61, was appointed Independent Non-Executive Director on 16th February 2005. He graduated with a Master in Business Administration from Brunel University, UK. He also hold a Diploma in Management Science (Finance), Institut Tadbiran Negara Malaysia (INTAN); Certificate of Executive Programme AIM and Senior Executive Fellows Programme, Harvard University, USA.
He joined the Sarawak Administrative Service in 1965. He worked in Government Service for 40 years and has held various senior posts in Government Departments and Statutory Bodies until he retired from service in December 2005.
Datu Haji Abdul Rashid Bin Mohd Azis is currently the Deputy Chairman of Yayasan Sarawak and is also a Board member of Sarawak Economic Development Corporation (SEDC).
He was a director of Sarawak Electricity Supply Corporation (SESCO); Sarawak Widows & Orphans Pension Fund (WOPF); alternate member to State Secretary Sarawak in the Employees’ Provident Fund (EPF) Board; Aseambankers (M) Berhad; Tradewinds (Malaysia) Berhad and member of Majlis Islam, Sarawak.
He is currently Chairman of the Charitable Trust, Bandar Sri Aman Mosque; and member of Yayasan Budaya Melayu Sarawak.
Senior Independent Non-Executive DirectorYB Tuan Haji Hamden Bin Haji Ahmad
Independent Non-Executive DirectorDatu Haji Abdul Rashid Bin Mohd Azis
MemberAudit Committee
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
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board of directors
Independent Non-Executive DirectorProfessor Abang Abdullah Bin Abang Mohamad Alli
Professor Abang Abdullah Bin Abang Mohamad Alli, 55, was appointed Independent Non-Executive Director on 15 May 2007.
Professor Abang Abdullah graduated with a Bachelor of Science (Hons) degree in Civil Engineering from the University of Brighton in 1974, and a Master of Science degree in Structural Engineering from the University of Manchester in 1975. He is a Registered Professional Engineer (PEng) with the Board of Engineers, Malaysia, a Chartered Engineer (CEng) with the Engineering Council, United Kingdom, and an Honorary Fellow of the ASEAN Federation of Engineering Organisations (HonFAFEO). He is a Fellow of the following institutions:-
a) Institution of Engineers, Malaysia (FIEM).b) Institution of Civil Engineers, United Kingdom (FICE).c) International Ferrocement Society (FIFS).d) Academy of Sciences, Malaysia (FASc).d) ASEAN Academy of Engineering & Technology (FAAET).
Professor Abang Abdullah began his career as a lecturer at Universiti Putra Malaysia on 29th January 1976, promoted to Associate Professor in 1982 and full Professor in 1987. He was upgraded to Senior Professor (Special Grade B) in 1995.
At the same time he was made Deputy Dean, Faculty of Engineering in 1981, and Dean in 1982. He was Chairman of the Malaysian Council of Engineering Deans and has been holding various positions in the public and private sectors, such as Design Engineer in Malaysian International Consultants in 1981/82 and Perunding Bakti Sdn Bhd in 1978. He served as a Board Member of the Malaysian Highway Authority (LLM) and the Board of Engineers, Malaysia (BEM).
Independent Non-Executive DirectorSylvester Ajah Subah @ Ajah Bin Subah
MemberAudit Committee
Remuneration Committee (appointed member of the above 2 Committees on 26 February 2007)
Sylvester Ajah Subah @ Ajah Bin Subah 64, was appointed Independent Non-Executive Director on 26th February 2007. He graduated with a Diploma in Town and Country Planning in 1968 from Technical College, Kuala Lumpur and a Diploma in Town and Country Planning in 1975 from Glasgow School of Arts.
He started his career as an Assistant Planning Officer in Land & Survey Department, Sibu from1969 to 1973. In May 1975 to 1977 he served as a Town Planning Officer in Land & Survey Department, Miri. In 1978 he was transferred to Land & Survey Department, Sibu. Mr. Sylvester joined Bintulu Development Authority (BDA) in 1979 as a Town Planning Officer. He was seconded to the Ministry of Resource Planning for 10 years from 1983 to 1993 as a Senior Planning Officer and also as Advisor to the State Planning Authority.
In 1994 he was promoted to the post of General Manager and held the position until his retirement in year 2001. As General Manager of BDA he was responsible for managing development projects in Bintulu including development of industrial estates, low cost housing, infrastructure projects and other public, social and recreational amenities.
He was elected as an Honorary Adviser to the Master Builders Association, Malaysia (MBAM) and Chairman of the CIDB Steering Committee on Industrialised Building System.
He is currently the Director & Professor (Housing Reserch Center) Universiti Putra Malaysia, President of the Federation of Engineering Institutions of Islamic Countries (FEIIC) since 2002 and a Past President of the Institution of Engineers, Malaysia (IEM). He holds various key positions in the following institutions:-
i) Adviser to the Proposed King Abdullah University of Science and Technology (KAUST), Saudi Arabia since 2006.
ii) Adjunct Professor at Universiti Malaysia Sarawak since 2005.
iii) Board/Council member of Universiti Kuala Lumpur (UniKL) since 2002.
iv) Board member of the National Accreditation Board (LAN) since 1997
v) Director of Housing Research Centre (HRC), Universiti Putra Malaysia since 1996.
vi) Board Member, Polytechnic Curriculum Board, Ministry of Higher Education since 2002.
In addition, he has written a book on Industrialised Buildings Systems (IBS) and has been involved on various research on housing and construction technology, specifically in the areas of low cost materials of construction, light-weight concrete, utilization of Malaysian bamboos as an engineering material, materials and structures, interlocking load bearing hollow block building system (Putra Block, which has been granted US, UK and Malaysian patents), industrialised building systems and affordable quality housing.
Professor Abang Abdullah and his research team won a gold medal for the Putra Block at the International Exhibition of Inventions and Innovations, Geneva, Switzerland on 4th April 2001. He was also awarded the CIDB R&D Award for research on the Putra Block Building System.
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
37
Please refer to page 133 for
Directors’ securities holdings
in the Company.
Save for Abang Hasni Bin
Abang Hasnan who is the
brother of Datuk Hasmi Bin
Hasnan, there are no other
family relationship between
the Directors and/or major
shareholders of the
Company.
All Directors are Malaysians.
None of the Directors have
been convicted for any
offences.
Please refer to page 49 for
Directors attendance at
board meetings held during
the financial year.
senior management team
1 2 3 4 5
6 7 8 9 10
11 12 13 14 15
16 17 18 19 20
21 22 23 24 25
26 27 28 29 30
38
1) Datuk Hasmi Bin Hasnan Managing Director
2) Dr. Sharifuddin Bin Abdul Wahab Deputy Managing Director
3) Ahmad Bin Abu Bakar Senior Executive Director
4) Ir. Suyanto Bin Osman Senior Executive Director (Business Development Construction)
5) Kueh Hoi Chuang Senior Executive Director (Property Development)
6) Abang Hasni Bin Abang Hasnan Executive Director
7) Ricky Kho Teck Hock Head of Corporate Affairs
8) Haji Radzali Bin Haji Alison Head of Property Investment and Overseas Business
9) Affendi Sapiee Head of Internal Audit
10) Gordon Kab Senior Head of Construction
11) Tony Lau Hiang Chu Director of Sales
12) Bong Siu Lian Company Secretary
13) Haji Abdul Rahman bin Abdul Rahim Senior Business Development Manager
14) Joseph Lee Han Sian Head of ICT
15) Charles Arthur Bateman Senior General Manager (Land administration)
16) Jeffrey Sim Lai Hee Head of Human Resource & Facilities Management
17) Haji Abdul Razak Bin Ahmad Marzuki Senior General Manager
18) Haji Abdullah Bin Mohd Mahyuddin Senior Business Development Manager
19) Haji Abdul Jalal Bin Abdul Rahim Group Credit Controller
20) Patrick Chieng Kwong Ee Quality Assurance Manager
21) Dayang Horyati Binti Abang Sahari Public Relation Manager
is a qualified registered NIOSH HSE Manager who has vast
experience in the construction industry. He holds an MBA from
University Technology Mara and a Bachelor of Business
Administration (International Business) from Universiti Utara
Malaysia. He is responsible for the overall HSE spectrum of the
organisation.
Victor Yee, Head of Contracts Department holds a Bachelor of
Building degree from University of Melbourne, Australia. He is
responsible for the overall contract administration of the
organisation. His 15 years of work experience in the construction
field were mainly involved in quantity surveying and contract
administration.
Tony Paulus Vitus, Quality Control Manager holds a
Bachelor in Civil Engineering degree from University Malaya, Kuala
Lumpur. He is responsible for the overall Quality Control spectrum
of the organisation.
42
from left:
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
43
Ir Wan Mohamad Su’ut B Wan Moss, Project
Manager (Special Project) holds a Bachelor of Engineering (Civil)
degree from University of Newcastle Upon Tyne, England. He is a
registered member of the Institution of Engineers, Malaysia and
Professional Engineer of the Board of Engineers, Malaysia.
He has 25 years of working experiences in construction industry
and his experiences span from management portfolio including
QAQC and HSE matters, engineering and construction services,
power services, operational and administration matters.
Mohd Ashraf Bin Abdullah, Senior Project Manager
holds a Bachelor of Engineering (Mechanical) degree from New
Mexico State University, USA. He has 17 years of experience in
construction industry as well as the Oil & Gas industry.
Megat Ahmad Shah Iskandar, Senior Accountant,
holds a Post Graduate Diploma in Applied Finance and Investment,
from Financial Services Institute of Australasia. He is a registered
accountant with MIA and also an Associate member of ACCA and
ICSA. His 10 years of experience were involved in finance, banking,
investment and corporate advisory work.
Janang Sawing, Senior Project Manager holds a Bachelor of
Engineering (Civil) degree from University of Glasgow Scotland, UK
and an MBA from UNIMAS. He has 18 years of experience in
construction industry involving project management, planning and
development.
Bong Siew Khim, Head of Quantity Surveying holds
Bachelor of Applied Science In Building Studies from the University
of South Australia. She is also a Graduate Member of Institution of
Surveyors Malaysia and a Provisional Member of Board of Quantity
Surveyors Malaysia.
Francis Ho, Head of Product Development holds a Bachelor of
Science (Architecture) from the University of New South Wales,
Sydney, Australia. He is also a member of the Board of Architects,
Malaysia and a graduate member of Persekutuan Arkitek Malaysia
(PAM). He has 26 years of experience in the construction and
property development industry.
44
audit comittee
Members
The Audit Committee comprises the following:-
YB Tuan Haji Hamden Bin Haji Ahmad- Chairman
Senior Independent Non-Executive Director
Datuk Hasmi Bin Hasnan- Member
Managing Director
Datu Haji Abdul Rashid Bin Mohd Azis- Member
Independent Non-Executive Director
Sylvester Ajah Subah @ Ajah Bin Subah- appointed member of the Audit Committee
on 26th February 2007Independent Non-Executive Director
Dr. Sharifuddin Bin Abdul Wahab- redesignated from Independent Non-Executive Director
to Deputy Managing Director on 26th February 2007and resigned as member of the Audit Committeeon the same dateDeputy Managing Director
The Audit Committee currently comprises the 3/4 IndependentNon-Executive and 1/4 Executive as follows:-
Category No. of Directors Percentage
IndependentNon-Executive Director 3 75%
Executive Director 1 25%
Total 4 100%
Attendance at the Audit Committee Meetings
The Audit Committee met five times during the year 2006 andthe details of attendance are as follows:-
Audit Committee Members No. ofMeetings Attendanceattended (%)
YB Tuan Haji HamdenBin Haji Ahmad 5/5 100
Datuk Hasmi Bin Hasnan 4/4+ 100
Datu Haji Abdul RashidBin Mohd Azis 5/5 100
Dr. Sharifuddin BinAbdul Wahab(redesignated fromIndependent Non-ExecutiveDirector to Deputy ManagingDirector on 26th February 2007and resigned as member ofthe Audit Committee on thesame date) *2/5 40
Sylvester Ajah Subah@ Ajah Bin Subah(appointed member of theAudit Committeeon 26th February 2007) N/A N/A
* Absent with apology
External auditors, internal auditors and relevant managementstaff are invited to attend the Audit Committee meetings todiscuss the results, the audit findings and financial reportingissues.
+ The Independent Directors of the Audit Committee met oncein executive session with the external auditors without thepresence of the executive member of the Committee and themanagement.
Activities of the Audit Committee
The activities of the Audit Committee during the financial yearunder review were as follows:-
1) Reviewed and discussed audited financial statements andthe quarterly unaudited financial statements withmanagement and both external and internal auditors to ensurecompliance with the Financial Reporting Standards (“FRS”).
2) Discussed with auditors matters required to be discussed onStatement on Internal Control.
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
45
3) Based on the review and discussion referred to in 1 and 2above, the Audit Committee recommends to the Board ofDirectors for approval:-a) the audited financial statements for the financial year
and the Statement on Internal Control; andb) the quarterly unaudited financial statements for
announcement to Bursa Malaysia Securities.4) Reviewed recurrent related party transactions and non-
recurrent related party transactions. The Audit Committeewill report to the Board its review on all commercial relationshipsbetween each director, major shareholders and personsconnected and the Naim Group on a quarterly basis. Whensuch commercial relationships exist the Audit Committee andthe Board will ensure that such transactions were on normalcommercial terms not more favourable to the related partiesthan those generally available to the public.
5) Reviewed and discussed the internal audit plan and reports.6) Reviewed and discussed audit plan and reports with external
auditor.
FUNCTIONS OF THEINTERNAL AUDIT DEPARTMENT
The functions of the Internal Audit Department are as follows:-
Reviewing and appraising the soundness, adequacy andapplication of accounting administrative and other operatingcontrols and providing advice in the use of controls to mitigaterisks to an acceptable level and at reasonable cost;Reviewing the efficiency and effectiveness of riskmanagement;Ascertaining the extent of compliance with establishedprocedures;Ascertaining the extend of which assets are accounted forand are safeguarded from losses of all kinds;Conducting special examinations and reviews at the requestof the Audit Committee and/or Board of DirectorsEvaluating the economy and efficiency with which resourcesare employed and recommending improvements inoperations.
Authority:To accomplish its objectives, the internal auditor is authorized tohave unrestricted access to the Company’s operations, functions,records, properties and personnel.
Reporting:The Internal Audit Department reports to the Audit Committeeall its auditing activities.
Duties and Responsibilities:Each year the Internal Audit Department will develop and executea comprehensive audit plan to be conducted in accordance withapplicable auditing standards. A comprehensive report on theinternal audit function will be made to the Audit Committee everyquarter.
The report will include the annual audit plan, review of all previousyear audits completed and in progress, including any follow-upreviews and any audits which were scheduled but not done.
Any activity which is illegal example conflict of interest,embezzlement or theft shall be reported to the Chairman of theAudit Committee and the Managing Director immediately upondiscovery by the audit staff.
Scope of Internal Audit Coverage
The followings are audit reports submitted by the Internal AuditDepartment during the financial year ended 31st December 2006:
1. Financial audit on NCSB Engineering Sdn Bhd2. Operational audit on the management of Sibu-Julau’s Road
Project.3. Employees Satisfaction Survey Report.4. Product quality and customer satisfaction survey for Bandar
Baru Permyjaya Miri.5. Contract audit related to BALB Project.6. Project management audit on Limbang’s CIQ Complex and
Mukah’s MRSM projects.7. Review of progress billings, recognition and collection for
property development projects.8. Review of headquarters’ administration expenses.9. Audit on inventory management at Naim Cendera Dua Sdn
Bhd and Naim Cendera Sdn Bhd.10. Other audits pertaining to the sub-contracting terms and
conditions as requested by the management.
A sound system of internal control reduces, but cannot eliminatethe possibility of poor judgment in decision making. During theyear, reviews on the existing internal controls covered under theaudit plan reveals that controls are generally satisfactory and inareas where controls were deemed lax, additional controls havebeen instituted to address the weaknesses in the system.
Terms of Reference
That the Terms of Reference for the Audit Committee are asfollows:-
Objectives
The objectives of the Audit Committee are to:-
a) provide assistance to the Board in fulfilling its fiduciaryresponsibilities particularly in the areas of internal controlsystems and financial reporting;
b) provide meetings and communication between Non-ExecutiveDirectors, the internal auditors, the external auditors andthe management to exchange views and information, as wellas confirm their respective authority and responsibilities;
c) undertake such additional duties as may be appropriate toassist the Board in carrying out its duties.
46
audit comittee
Composition
The Audit Committee shall be appointed by the Board from amongtheir number and shall comprise no fewer than three (3) members,where the majority shall be independent Directors. At least 1member must be MIA member
- 2 Independent Non-Executive Directors; and- 1 Executive Director
If a member of the Audit Committee resigns dies or for any otherreason ceases to be a member with the result that the number ofmembers is reduced below 3, the Board shall within 3 months ofthe event, appoint such number of new members as may berequired to fill the vacancy.
Authority
The Audit Committee shall have:-
a) the authority to investigate any activity within its terms ofreference and it shall have unrestricted access to anyinformation relevant to its activities from employees of theNaim Group. All employees are directed to cooperate withany request made by the Committee.
b) the necessary resources required to carry out its duties andit is authorized to obtain independent professional advice asit considers necessary.
Duties and Responsibilities
The Audit Committee shall undertake the following duties andresponsibilities:-
a) Internal Audit
i) Review the adequacy of the scope, functions andresources of the internal audit function and that it hasthe necessary authority to carry out its work;
ii) Evaluate the internal audit programmes, processes, theresults of internal audit programme, processes orinvestigation undertaken and whether or not appropriateaction is taken on the recommendation of the internalaudit function.
b) External Audit
i) Review with the external auditors their audit plan, scopeof audit and their audit reports;
ii) Evaluate the system of internal controls;iii) Evaluate the performance of external auditors and to
make recommendations to the Board of Directors on theirappointment and remuneration.
c) Audit Reports
i) To consider the major findings of internal investigationsand management’s response.
ii) To discuss problems and reservations arising from theinterim and final external audits, and any matters theexternal auditors may wish to discuss (in the absence ofManagement, where necessary)
d) Financial Reporting
Review the quarterly and annual financial statements of theNaim Group for recommendation to the Board of Directorsfor approval, focusing particularly on:-
i) changes in or implementation of major accounting policychanges;
ii) significant and unusual events; andiii) compliance with accounting standards and other legal
requirements.
e) Related Party Matters
Review the related party transactions and the conflict ofinterest situations that may arise within the Naim Groupincluding any transaction, procedures or course of conductthat raises questions of management integrity. They arealso required to ensure that the Directors report suchtransactions annually to the shareholders via the annualreport.
f) Other Matters
To consider such other matters as the Committee deemsappropriate or as authorised by the Board of Directors.
Meetings
Meetings shall be not less than 4 times a year. A quorumshall consist of 2 members; the majority of members presentmust be independent directors.
The members of the Audit Committee shall elect a Chairmanfrom among their number who is an Independent Director.
The Secretary of the Committee shall be the CompanySecretary.
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
47
corporate governance
A Note on Terminology:
Naim Cendera Holdings Berhad is the
ultimate holding company for Naim Cendera Sdn Bhd
and other subsidiary companies, as well as their
respective subsidiaries. As the principles and practices
of good corporate governance apply not only to the
ultimate holding company but also all of its subsidiaries,
we have chosen to forego the use of the term
“Company” in this statement, and instead use the term
“Group”, which encompasses all companies operating
under the control of Naim Cendera Holdings Berhad.
As the function of Corporate Governance continues itsevolvement into the 21st Century, key elements of corporategovernance namely - the structures and the relationships whichdetermine corporate direction and performance - havenevertheless remained intact. The Board of Directors continuesto play the central role through its relationships with mainparticipants; the shareholders and management. Additionalparticipants are employees, customers, suppliers, financialinstitutions, regulators, various interest groups (such asenvironmental groups, social welfare organisations, etc.) andthe community at large. The corporate governance structuresare also dependent on legal and regulatory norms andrequirements.
In the past, regulatory pressure was the main driving force forchange. Nowadays, however, the key forces driving futurechange are all concerned with the creation of shareholder value.These include the emergence of new frameworks and systems toassess an organization’s best practices in corporate governance- such as the use of ratios quantifying Return on Investment,Earnings per share and so on - to build long term value creationpotential in an organization viewed from a strategic perspective.At the same time, the transformation of a business entity intomore democratic, transparent and accountable organization helpsto unleash the wealth-generating capacity of human capital;specifically the skills and knowledge of employees.
The welcome emergence of external governance rating agenciesmakes it possible to measure the degree to which the companycomplies with best practices, and enables the accurate andindependent benchmarking of these practices. These agenciesare key factors in the ongoing Corporate Governance qualityrevolution, and also offer tangible rewards to those companieswho make the necessary efforts to improve corporategovernance. In the 2006 Corporate Governance Survey Report,a joint study by Minority Shareholder Watchdog Group and theUniversity of Nottingham Business School, Naim was ranked topamong Sarawak-based companies and second overall in theproperty sector for companies listed on Bursa Malaysia fordemonstrating best practices in Corporate Governance.
The Board of Directors recognises the importance of corporategovernance and is continuously managing and prioritizinggovernance as a crucial part of the value creation process andan essential component of Naim’s long-term strategic goal. Goodgovernance in Naim is measured using all conventionalbenchmarks, with special emphasis on the degree to which valueis added to the outcomes achieved by the management team.
BOARD OF DIRECTORS
The Board has the overall obligations to act in the best interestsof the shareholders and to protect the shareholders’ investment.
The Board is responsible for the strategic direction of the business,establishing goals for management and monitoring theachievement of goals directly and through its committees.
48
Hence, the Board of Directors plays a vital role in corporategovernance. It endorses the organisation’s strategy, developspolicy, appoints and remunerates staff, and ensuresaccountability to the shareholders and the relevant authorities.
BOARD COMPOSITION AND BALANCE
There were no changes in Board’s composition during the yearunder review.
Category No. of Minimumdirectors (%) Requirement*
Executive Directors 5 50 N/A
Non-ExecutiveDirectors 2 20 N/A
IndependentNon-ExecutiveDirectors 3 30 3
Total 10 100
It is the policy of the Company that the number of directors maybe expanded to ensure that the Board functions efficiently andeffectively. On 26 February 2007, Dr. Sharifuddin Bin Abdul Wahabwas redesignated from being an Independent Non-ExecutiveDirector to Deputy Managing Director. As the result of theredesignation, 2 Independent Non-Executive Directors wereappointed in order to comply with Paragraph 15.02 of the ListingRequirements. Mr. Sylvester Ajah Subah @ Ajah Bin Subah wasappointed Independent Non-Executive Director on 26 February2007. Professor Abang Abdullah bin Abang Mohamad Alli wasappointed as an independent non-executive director on 15 May2007. The latest composition of the Board is as follows:
Category No. of Minimumdirectors (%) Requirement*
Executive Directors 6 50 N/A
Non-ExecutiveDirectors 2 17 N/A
IndependentNon-Executive 4 33 4
Total 12 100
* Paragraph 15.02, Bursa Malaysia Securities Listing Requirementsrequires of the Board to comprise of independent directors.
Currently, the Board comprises 50% Executive Directors and50% Non-Executive Directors. Of the 50% Non-ExecutiveDirectors 66% (33% of the total Board) are independent.
Executive Directors are involved in the implementation ofstrategies and the operations of the Company. The advantageof having high percentage of Executive Directors on the Board isthat there will be a shared understanding among Board membersand the management on the overall direction. Hence for anycritical decisions sought from the Board, half of the Board wouldbe fully aware of the current general outlook of the Companyand its future aspirations, whereas the other half, the Non-Executive Directors, may only be familiar with the futureaspirations and long-term value.
Non-Executive Directors do not participate in the routineoperations of the Group. Independent Non-Executive Directorsare independent of management and free of any business orother relationship, and therefore able to promote arm’s-lengthoversight and at the same time bring independent thinking, viewsand judgment to bear in decision making. The Board monitors theindependence of each Director on a half yearly basis, in respectof the interests disclosed by them.
The Non-Executive Directors draw upon their professionalknowledge, background, and experience - especially advice theyget from outside the Group and/or through the personal andbusiness relationships they have developed - to help the Boardtackle its related challenges.
YB Tuan Haji Hamden Bin Haji Ahmad, Senior Independent Non-Executive Director, shall continue to act as a liaison between theinvestment community and the Group’s management and theBoard.
BOARD MEETINGS
The Board meets every quarter and also convenes meetings asand when deemed necessary. The Board met five times duringthe year in review.
corporate governance
1 3
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
49
Details of Board Members’ attendance at Board meetings are as follows:-
Name of Director Date of Appointment Number of Board/Resignation Meetings attended Percentage
Datuk Abdul Hamed Bin Haji Sepawi Appointed on 25 July 2003 5/5 100%
Datuk Hasmi Bin Hasnan Appointed on 25 July 2003 5/5 100%
Dr. Sharifuddin Bin Abdul Wahab Appointed on 25 July 2003 3/5 * 60%
Ahmad Bin Abu Bakar Appointed on 6 February 2006 5/5 100%
Ir. Suyanto Bin Osman Appointed on 25 July 2003 5/5 100%
Kueh Hoi Chuang Appointed on 25 July 2003 5/5 100%
Abang Hasni Bin Abang Hasnan Appointed on 25 July 2003 5/5 100%
YB Tuan Haji Hamden Bin Haji Ahmad Appointed on 25 July 2003 5/5 100%
Ir. Abang Jemat Bin Abang Bujang Appointed on 25 July 2003 5/5 100%
Datu Haji Abdul Rashid Bin Mohd. Azis Appointed on 16 February 2005 5/5 100%
Sylvester Ajah Subah @ Ajah Bin Subah Appointed on 26 February 2007 N/A N/A
Professor Abang Abdullah BinAbang Mohamad Alli Appointed on 15 May 2007 N/A N/A
* Absent with apologies on 6th February 2006 & 28th April 2006
The Board meets at least once every quarter for the purpose ofreviewing the Group’s past quarterly financial performanceagainst its annual operating plan, budget, future strategy andbusiness plans.
DISCLOSURE POLICY INRELATION TO FINANCIAL REPORTING
In the past, financial statements were used to gauge the financialperformance of the Company. Gradually, the accounting systemhas been seen as recording the past or history of transactionsthat has taken place, and it is incapable of providing insightsabout the future value creation potential. Financial oversightshall continue to be deemed necessary; however, it is viewedinadequate without supporting information which presents it in arealistic business context. Hence a paradigm shift has takenplace in our disclosure notes to the accounts, in particular theReports on Prospects for year 2007 and Beyond and ForwardLooking Statement as per our unaudited 4th Quarter FinancialReport ended 31st December 2006 and announced to BursaMalaysia Securities Berhad on 26th February 2007.
DIVISION OF BOARD RESPONSIBILITIES
Matters reserved for the Board and those delegated tomanagement depend on the capability of each party and alsothe size, complexity and ownership structure of the matter inquestion, the corporate culture, and the skills of respectivedirectors and managers. The division of responsibilities betweenthe Board and management therefore varies with the evolutionof the Group. Management is continuously reviewing the balanceof responsibilities, to ensure that the division of functions isadapted according to the changing needs of the Group.
The Chairman chairs all Board meetings and he is responsible forleadership of the Board, whereas the Managing Director is chargedwith the day to day conduct of the Group’s business. However,at Board meetings the Chairman and the Managing Director sharea common role of providing leadership and guidance to the Board,facilitating effective contribution from Board members to ensureproper deliberation of all matters requiring the Board’s attention.
All Board members are required to attend Board meetings. TheBoard also invites the external auditor, senior management staffand company secretaries to attend the meetings whenappropriate. Other consultants and visitors may also be invitedto attend the meetings from time to time.
50
A total of nine Board Committees assist the Board in itsdeliberations (see Board Committees, below, for further details).Each Committee reports to the Board on a regular basis, andkeeps the Board fully informed of its respective activities, decisionsand recommendations.
SUPPLY OF INFORMATION
Agendas are prepared for each Board meeting and circulated toDirectors prior to the meetings.
Agenda items for which resolution is sought are identified andclearly stipulated in the board paper. Presentations are scheduledduring Board and Committee meetings by management and/orconsultants and advisors in order to provide the Board with properunderstanding of, and competence to deal with, the current andemerging issues of the Group’s business. Management preparessuch information in advance of each Board and Committee meetingto allow for adequate review and preparation.
In addition, all Directors have unrestricted access to officers andemployees of the Group.
The Managing Director, Deputy Managing Director, ExecutiveDirector (Finance & Operations), Head of Corporate Affairs, andCompany Secretary are responsible for the preparation andcirculation of Board papers.
BOARD ANDMANAGEMENT RESPONSIBILITIES
The Board is primarily responsible for formulating policies andstrategies to maximize long term shareholder value. Generally,the Board and Senior Management are collectively responsiblefor value creation process to achieve the Group’s long-termstrategic direction and overseeing the Group’s performance.
Management is responsible for implementing the Group’ strategicplan whereas, the Board is responsible for guiding the strategicdirection, challenging management’s strategic plan, revisingtargets where deemed appropriate, and reviewing the businessplan and budget.
Once the business plan is approved by the Board, managementis responsible for its implementation. Each division has its ownstrategic plans, alternative plans, contingency plans, whichidentify the risks that would hamper the achievement of thetargets, identify the human factor(s) required, and monitor theperformance of the division on an on-going basis.
The Group’s governance framework has been designed to enablethe Board to oversee effective management and to providestrategic direction.
The Board of Directors reviews the Group’s long-term strategyannually. It also approves the business plan, operating budget,capital expenditure budget and financing plans annually.
The Managing Director and Deputy Managing Director overseeand monitor the performance of the Executive Directors and
the senior management team, which is charged with the day-to-day operation of the Group. The Managing Director and DeputyManaging Director evaluate senior management performanceagainst those plans and budgets on a monthly basis. The Boardreviews the financial performance of the Group on a quarterlybasis and it is fundamentally responsible for exercising businessjudgment and deliberating, on value creation objectives of long-term significance to the Group, and evaluating performance ofthe management team via benchmarking tools such as Return onInvestment, Return on Equity, Return on Total Assets etc.
CORPORATERESPONSIBILITIES STATEMENT
The Group’s corporate responsibilities are summarized as follows:
“To consider, monitor and ensure that our operations continue tohave a positive impact on our employees, the communities wework in, and the environment that nurtures us, and to promotetrust and mutual respect amongst our customers and all otherstakeholders.”
ACCESS TO ADVICE AND INFORMATION
Directors are allowed and encouraged to seek independent orprofessional advice, at the Company’s expense, on any matterthey consider crucial to facilitate a business judgment and decision.However, before exercising this right they are required to discussthe issue with the Chairman and Managing Director to ensurethat the rights of the Company are not jeopardized and thatconfidentiality is maintained.
All Directors have access to the advice and services of SeniorManagement, Company Secretaries and Accountants at all times.
All Directors are provided with timely and complete informationon Board affairs and issues requiring Board’s decision.Management also provides progress reports relating to operationaland financial performance of the Group. Please refer to Supplyof Information above.
RESTRICTION ONDEALING IN SECURITIES
Directors and Principal Officers are discouraged from dealing inthe Company’s securities during closed periods, i.e. from theperiod commencing one month prior to the targeted date ofannouncement of the quarterly results up to one full market dayafter the announcement.
Additionally, no dealing in the Company’s securities is allowedfrom the time that price sensitive information is obtained up toone full market day after the announcement to the public. Pricesensitive information is any information concerning the Companythat a reasonable person would expect to have a material effecton the price or value of the Company’s securities.
corporate governance
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
51
APPOINTMENTS TO THE BOARD
It is the responsibility of the Board to identify and nominatecandidates for appointment as members of the Board. Prior toany appointment, the Nomination Committee (see BoardCommittees, below) assesses and evaluates any proposal forappointment and/or redesignation and new candidate’scompetence in the mix of skills, knowledge, qualifications,expertise, experience and core competencies that will bestcomplement the Board’s effectiveness.
Only candidates possessing the highest standards of personaland professional ethics and integrity, practical wisdom and maturejudgment, and who are committed to representing the interestsof the stockholders will be considered for recommendation to theBoard for appointment.
Candidates for Non-Executive Director positions will also beassessed on the number and nature of directorships held in othercompanies, independence of the candidate pursuant to BursaMalaysia Listing Requirements and the calls on their time fromother commitments, in order to ensure their full contribution aseffective Board members.
The Nomination Committee also reports to the Board all past 2years’ commercial relationships and conflicts of interest (if any)
between the Group and the nominated candidate for the Board’sappointment.
If the proposed appointment is deemed to be in the best interestsof the Group, a recommendation will be submitted to the Boardfor appointment of the new Director.
Nomination Committee also reviews changes to the structure ofthe Board in light of the Listing Requirements and the MalaysianCode of Corporate Governance pertaining to composition of theBoard and its Board committees.
RE-ELECTION OF DIRECTORS
All Directors including the Managing Director, retire by rotation atleast once every three years. Retiring Directors may offerthemselves for re-election to the Board at the Annual GeneralMeeting.
In addition, newly-appointed director will submit himself forretirement and re-election at the Annual General Meetingimmediately following his appointment pursuant to Article 92 ofthe Articles of Association. Thereafter he shall be subject to theone-third rotation retirement rule.
Directors retiring by rotation are set out below :-
Director PositionPosition Age Last Retirement Year due forRetirement
Datuk Abdul Hamed Bin Haji Sepawi Non-Executive Chairman 58 2007 2010
Datuk Hasmi Bin Hasnan Managing Director 54 2007 2010
Dr. Sharifuddin Bin Abdul Wahab * Deputy Managing Director 51 2005 2008
Ir. Suyanto Bin Osman Executive Director 49 2007 2010
Mr. Kueh Hoi Chuang Executive Director 51 2005 2008
Abang Hasni Bin Abang Hasnan Executive Director 56 2006 2009
YB Tuan Haji Hamden Bin Haji Ahmad Senior IndependentNon-Executive Director 58 2006 2009
Ir. Abang Jemat Bin Abang Bujang Non-Executive Director 54 2006 2009
Datu Haji Abdul Rashid Bin Mohd. Azis IndependentNon-Executive Director 61 2005 2008
Ahmad Bin Abu Bakar Executive Director 53 2006 2009
Sylvester Ajah Subah @ Ajah Bin Subah Independent(Appointed on 26 February 2007) Non-Executive Director 64 2007# 2010
Professor Abang Abdullah Bin Abang IndependentMohamad Alli (Appointed on 15 May 2007) Non-Executive Director 55 2007# 2010
* redesignated from Independent Non-Executive Director to Deputy Managing Director on 26 February 2007
# Article 92 requires that “any director so appointed (to fill a casual vacancy or as an addition to the existing Directors) shall hold officeuntil the next annual general meeting … and shall not be taken into account in determining the Directors who are to retire by rotationat that meeting.”
52
corporate governance
DIRECTORS’ TRAINING
Continuing Education Programme
All Directors have fully complied with the CEP requirements. Newlyappointed Directors have attended the Mandatory AccreditationProgramme (MAP) within the prescribed timeframe as stipulatedby Bursa Malaysia Securities.
Directors who attended training during the year under review,and a brief description of the training, are listed as follows:
Name of Director Description of Training
Datuk Hasmi Bin Hasnan Corporate Retreat 2006 : Strategic Management
Dr. Sharifuddin Bin Abdul Wahab Corporate Retreat 2006 : Strategic Management
Ahmad Bin Abu Bakar(appointed on 6 February 2006) Corporate Retreat 2006 : Strategic Management
Management Development Follow Up SessionGoods and Services Tax & Financial Reporting Standard SeminarChief Financial Officer Summit 2006Ernst & Young Seminar – 1st Quarterly Interim Reporting2nd Annual Conference on Privatization,Public-Private Partnerships and Private Finance Initiative 20061-Day Awareness Seminar on Financial Standards2-Day Intensive Workshop on Frameworks & Strategies for PrivateFinance Initiatives (PFI): Transaction Models & International Best PracticesStrategic Planning & Implementation WorkshopCEO Luncheon Talk Series 2006
Ir. Suyanto Bin Osman Corporate Retreat 2006 : Strategic Management2nd Annual Conference on Privatization,Public-Private Partnerships and Private Finance Initiative 2006Management Development Follow Up SessionCEO Luncheon Talk Series 2006
Kueh Hoi Chuang Corporate Retreat 2006 : Strategic ManagementManagement Development Follow Up SessionCEO Luncheon Talk Series 2006National Property Conference (NPDC) 2006
Abang Hasni Bin Abang Hasnan Corporate Retreat 2006 : Strategic ManagementManagement Development Follow Up Session
YB Haji Hamden Bin Haji Ahmad Corporate Retreat 2006: Strategic Management
Datu Haji Abdul Rashid Bin Mohd. Azis 2nd Annual Directors Duties Conference 2006
Sylvester Ajah Subah @ Ajah Bin Subah(appointed on 26 February 2007) N/A
Professor Abang Abdullah Bin AbangMohamad Ali (appointed on 15 May 2007) N/A
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
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BOARD COMMITTEES
The Board has established 9 Board Committees as follows:
The establishment of Committees is to assist the Board in theexecution of its duties, to allow detailed consideration of complexissues, and to ensure diversity of opinions, suggestions andrecommendations from the Committees. Each Committee is givena written charter with specific roles and responsibilities,composition, structure, membership requirements and the mannerin which the Committee is to operate. The Committees are toensure effective Board processes, structures and roles, includingBoard performance evaluation by the Nomination Committee. Allmatters determined by the Committees are submitted to the fullBoard as opinions and/or recommendations for Board decisions.
It is the view of the Board that the size of each Committee andthe blend of skills and experience of its respective members aresufficient to enable the Committee to discharge its responsibilitiesin accordance with the charter. Members of each Committee aredrawn from the Board and from the Group’s senior managementteam, based on their respective skills, responsibilities and areasof expertise.
The Nomination Committee shall periodically review the committeeassignments and make recommendations to the Board for rotationof assignments and appointments as appropriate. The Chairmanof each Committee will develop the agenda for each meeting andwill determine the frequency of the meetings.
Board of Directors
Board Executive Committee
Nomination Committee
Remuneration Committee
Audit Committee
Risk Management Committee
Human Resource Operations Committee
Business Development Committee
Business Process Engineering Committee
Corporate Disclosure Committee
NOMINATION COMMITTEE
The Nomination Committee was established on 13 November2003. It comprises the following members:-
Datuk Abdul Hamed Bin Haji Sepawi- as Chairman of the Nomination Committee
Non-Executive Chairman
YB Tuan Haji Hamden bin Haji Ahmad- as member of the Nomination Committee
Senior Independent Non-Executive Director
Datu’ Haji Abdul Rashid Bin Mohd Azis- as member of the Nomination Committee
Independent Non-Executive Director
The structure of executive and non-executive participation inthe Nomination Committee is as follows:-
Category No. ofdirectors Percentage
Executive Director 0 0.0%
Non-Executive Director 1 33.33%
IndependentNon-Executive Director 2 66.67%
Total 3 100.00%
The main role of the Committee is to consider the nominees forappointment to the Board of directors and to assess the corecompetencies of each existing Board member and newappointments contributing particularly knowledge, expertise orexperience and taking into account the future needs of the Group.Candidates will be evaluated in one or more of the following:-
Relevant KnowledgeBoard members must possess commercial knowledge, businessacumen and experience.
Strategy and VisionWith the requisite knowledge as mentioned earlier, Boardmembers must possess the capability to provide insight,guidance and direction to management by promotingimprovement, modeling new trends, evaluating strategies.
Business JudgmentShareholders rely on the Board to make rational and sensibledecisions on their behalf to bring about a reasonable returnto their investments. The Board has to maintain a soundbusiness decisions that add value to the long-term strategicadvantage of the Company.
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corporate governance
ManagementBoard members must be capable of monitoring management’sperformance through having an adequate knowledge offinancial accounting and corporate finance.
Industry KnowledgeBusinesses normally face new challenges and newopportunities which are unique to the industry. The Committeewill recruit and/or maintain an appropriate level of industry-specific knowledge on the Board.
Time CommitmentService on the Board demands a considerable commitment oftime to attend and participate in regular and special meetingsof the Board and its committees. Large portion of time isdevoted to reviewing materials relating of the business andpreparing for meetings of the Board and its committees.
Other DirectorshipsThe Committee will also take into consideration whether aDirector is otherwise retired or to be retired from full timeemployment and, thereby, able to take up additionaldirectorships.
Nomination Committee also recommends representation insubsidiaries Board and in meetings of members.
Subsidiaries Board comprises a mix representation frommanagement and from executive members of the parent company.
The Nomination Committee also evaluates the following:-
1) Board structure, size and the balance of representation onthe Board in light of the Listing Requirements;
2) Performance of the Board and Board Committees;3) Review the mix of skills, experience including core
competencies of non-executive Directors;4) Directors’ Rotational Retirement Schedule.
The Nomination Committee met twice during the year underreview.
Terms of Reference
CompositionThe Nomination Committee shall be appointed by the Board fromamong their number and shall comprise of no fewer than three(3) members, all of whom shall be Non-Executive Directors and amajority shall be Independent Non-Executive Directors.Duties and Responsibilities
The duties and responsibilities of the Nomination Committee areas follows:-
a) To consider and recommend to the Board competent personsof the highest calibre and integrity for appointment as:-
i) members of the Boardii) members of the Board Committees
b) to review the required mix of skills and experience and otherqualities, including core competencies of non-executiveDirectors on an annual basis;
c) to review the performance of members of the Board,Managing Directors and members of Board Committees; andto assess the effectiveness of the Board Committee and theBoard as a whole and the contribution of each individualDirector;
d) to review the Board structure and size and the balance ofappointments between Executive Directors and Non-Executive Directors;
e) to review the adequacy of committee structures of BoardCommittees;
f ) to review the structure for management succession anddevelopment for the orderly succession of management.
REMUNERATION COMMITTEE
The Remuneration Committed was formed on 13th November2003. The Committee consists of the following members:-
Ir. Abang Jemat Bin Abang Bujang- as Chairman of the Remuneration Committee
Non-Executive Director
Datuk Hasmi Bin Hasnan- as member of the Remuneration Committee
Managing Director
Dr. Sharifuddin Bin Abdul Wahab- (redesignated from Independent Non-Executive Director
to Deputy Managing Director and resigned as member ofthe Remuneration Committee on 26th February 2007)Deputy Managing Director
Sylvester Ajah Subah @ Ajah Bin Subah- (appointed member of the Remuneration
Committee on 26th February 2007)Independent Non-Executive Director
Datu Haji Abdul Rashid Bin Mohd Azis- (appointed member of the Remuneration
Committee on 27th April 2007)Independent Non-Executive Director
The composition of executive and non-executive participation inthe Remuneration Committee is as follows:-
Category No. ofdirectors Percentage
IndependentNon-Executive Director 2 50.00%
Non-Executive Director 1 25.00%
Executive Director 1 25.00%
Total 4 100.00%
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In determining remuneration policy and the quantum of therewards, the Remuneration Committee takes into considerationthe structures and levels of remuneration for executive directorsin other comparator companies. The remuneration package isstructured primarily arithmetically linked to the financialperformance of the Group and with non-arithmetic elementdetermine by reference to personality traits, changes in job scopeand responsibilities. In addition, incentives will be paid based on2 criterias, achievement of targets and outcomes and the abilityto contribute to the long term value creation of the organization.The overall remuneration package is devised to retain a stablemanagement team and to further encourage the creation ofvalue for the shareholders.
The Remuneration Committee met twice during the year underreview.
Terms of Reference
Composition
The Remuneration Committee shall be appointed by the Boardfrom among their number and shall comprise not fewer thanthree (3) members, a majority of members shall be Non-ExecutiveDirectors.
Duties and Responsibilities
The duties and responsibilities of the Remuneration Committeeare as follows:-
a) to review annually and recommend to the Board theCompany’s overall remuneration policy and guidelines forExecutive Directors to ensure that the remunerationpackages are strongly linked to performances;
b) to enhance shareholders’ value by ensuring that individualperformance and rewards of Executive Directors reflect andreinforce the business objectives and long term goals of theGroup;
c) to keep abreast with changes in the total remunerationpackages in external market comparables, and reviews andrecommends changes to the Board when deemed necessary.
No member of the Committee or any other Director shall beinvolved in the deliberations in respect of his remuneration andbenefits to be granted.
RISK MANAGEMENT COMMITTEE
The Risk Management Committee was established on 13th
November 2003. The Risk Management Committee comprisesthe following:-
Datuk Hasmi Bin Hasnan- as Chairman of the Risk Management Committee
Managing Director
YB Tuan Haji Hamden Bin Haji Ahmad- as member of the Risk Management Committee
Senior Independent Non-Executive Director
Dr. Sharifuddin Bin Abdul Wahab- (appointed member of the Risk Management Committee
on 27th April 2007)Deputy Managing Director
Ahmad Bin Abu Bakar- (appointed member of the Risk Management
Committee on 28th April 2006)Executive Director
Ir. Suyanto Bin Osman- as member of the Risk Management Committee
Executive Director
Kueh Hoi Chuang- as member of the Risk Management Committee
Leong Chin Chiew- (resigned as Senior Head of Construction Division and
ceased to be a member of the Risk ManagementCommittee on 4th October 2006)
Gordon Kab- (appointed member of the Risk Management
Committee on 5th December 2006)Senior Head of Construction
Hii Doh Yiew- (appointed member of the Risk Management
Committee on 5th December 2006)Senior Manager (Finance & Corporate Planning)
A representative from the Internal Audit Department
The composition of executive and non-executive participation inthe Risk Management Committee is as follows:-
Category No. ofdirectors Percentage
IndependentNon-Executive Director 1 11.11%
Executive Director 5 55.56%
Management Staff 2 22.22%
Internal Auditor 1 11.11%
Total 9 100.00%
Planning in an organization involves dealing with many kinds ofrisk. Risks include uncertain events and conditions which if theyoccur have an either positive or negative effect on theorganisation’s objectives. Hence, the risk management processinvolves forecasting into the future, trying to predict what mighthappen and assessing its impact on the business strategy. Effectivestrategic planning involves balancing these risk factors.
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corporate governance
A brainstorming session is conducted annually to look at the risksor factors that would hinder and/or foster the achievement ofthe long-term strategic objectives of the Company.
The senior management team meets regularly (on a monthlybasis) to review the performance of the Group. In the course ofmonitoring the results against target, management also discussesfactors that impede the Group’s business progress and at thesame time considers opportunities that may arise. At themanagement level, the targets are expressed in terms of EarningsPer Share or Return on Investment or some other applicablequantifiable measurements. In order to maintain a realistic target,senior management with the approval of the Managing Directormay make risk-adjustments, if deemed necessary in light of theprevailing conditions so that overestimation or underestimationof risk is minimized.
Risks are also dealt with at varying degree at all levels ofoperations in the following aspects:-
a) Business planning, regular reviews of the business plan andmarket risk and making adjustments thereto;
b) Financial performance – managing cashflow and ensuringthat the organization meets the obligations and achieves itsgoal;
c) Human Resource management – recruiting and at the sametime retaining employees with the relevant talent to achievethe business goal;
d) EDP management – setting standards and conductingfrequent backups in anticipation of breakdowns andcontingency planning thereto;
e) Occupational Health and Safety division – by providing therelevant training and the imposition of fines on those who failto comply with agreed standards;
f ) Adequate quality assurance – setting standards for houses,buildings and infrastructure facilities and implementingsystems to meet those standards;
g) Crisis management – anticipating or business continuityplanning in advance.
During the year under review, the Risk Management Committeemet twice.
Terms of Reference
Composition
The Risk Management Committee shall comprise no fewer thanfive (5) members and one of whom shall be a representativefrom the Internal Audit.
Duties and Responsibilities
The duties and responsibilities of the Risk Management Committeeare as follows:-
a) to establish risk policies and risk framework.
b) to identify, evaluate, monitor the risks portfolio and formulatemitigation strategies/action plans to manage the overall riskassociated with the Group’s activities;
c) to recommend appropriate risk management policies andprocedures which shall be reviewed regularly to ensure thatthey are both appropriately dealt with a view to the longterm viability of the Naim Group;
d) to review on a periodical basis the Group’s overall objectivesin assessing the current risk portfolio composition and therisk appetite;
e) to provide the Board with quarterly reports on theeffectiveness of the risk management and internal controlsystem;
f ) to ensure a proper balance between risk incurred andpotential returns to shareholders;
g) the Internal Audit Department shall assess the adequacyand reliability of the risk management process;
h) the Internal Audit Department may pursue further in areasidentified as high risks and report its findings andrecommendations to the Audit Committee;
i) such other responsibilities as may be delegated by the Boardfrom time to time.
BOARD EXECUTIVE COMMITTEE
The Board Executive Committee was established on 13 November2003. Its membership comprises the following:-
Datuk Abdul Hamed Bin Haji Sepawi- as Chairman of the Board Executive Committee
Non-Executive Chairman
Datuk Hasmi Bin Hasnan- as member of the Board Executive Committee
Managing Director
Dr. Sharifuddin Bin Abdul Wahab- (appointed member of the Board Executive Committee
on 27th April 2007)Deputy Managing Director
Suyanto Bin Osman- as member of the Board Executive Committee
Executive Director
Ahmad Bin Abu Bakar- as member of the Board Executive Committee
Executive Director
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
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The composition of executive and non-executive participation inthe Board Executive Committee is as follows:-
Category No. ofdirectors Percentage
Non-Executive Director 1 20%
Executive Director 4 80%
Total 5 100%
The Board Executive Committee is crucial for ensuring effectiveprocesses, articulating direction, evaluating effectiveness andhelping to pursue excellence in organizational performance byencouraging constructive dialogue within the Board andCommittee.
Terms of Reference
Composition
The Board Executive Committee shall be established and membersthereto shall be appointed by the Board. The Committee shallhave no fewer than three (3) members.
Responsibilities
The Board Executive Committee is responsible for implementingthe decisions and policies by the Board as well as to coordinateactivities necessary to ensure successful implementation of theGroup’s business decision.
Duties
The duties of the Board Executive Committee are as follows:-
a) to review and adopt the strategic plan for the Group;
b) to oversee the conduct of the Company’s business plan andevaluate whether the business is properly managed;
c) to develop and implement an investor relations programmeor shareholder communications policy for the Company;
d) to review the adequacy and the integrity of the Company’sinternal control systems and management informationsystems;
e) to decide on all matters relating to banking facilities as maybe required for the conduct of the Group’s operations;
f ) The Board Executive Committee is also empowered to :-
i) review, recommend and approve capital expenditure;ii) review, recommend and approve disposal of capital items;iii) review, recommend and approve the Award of Tenders
within the restricted authority given by way of authoritylimits determined by the Board.
HUMAN RESOURCEOPERATIONS COMMITTEE
The Human Resource Operations Committee was established on24th May 2004. The Human Resource Operations Committeecomprises the following:-
Dr. Sharifuddin Bin Abdul Wahab- Chairman
Deputy Managing Director
Datuk Hasmi Bin Hasnan- Managing Director
Ahmad Bin Abu Bakar- (appointed member of the Human Resource Operations
Committee on 28th April 2006)Executive Director
Ir. Abang Jemat Bin Abang Bujang- Non-Executive Director
Kueh Hoi Chuang- Executive Director
Datu’ Haji Abdul Rashid Bin Mohd Azis- (appointed member of the Human Resource Operations
Committee on 28th April 2006)Independent Non-Executive Director
Leong Chin Chiew- (resigned as Senior Head of Construction Division and
ceased to be a member of the Human Resource OperationsCommittee on 4th October 2006)
Gordon Kab- (appointed member of the Human Resource Operations
Committee on 5th December 2006)Senior Head of Construction
Mr. Jeffrey Sim- Senior Human Resource Manager
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corporate governance
The composition of executive, non-executive and managementparticipation in the Human Resource Operations Committee is asfollows:-
Category No. ofdirectors Percentage
IndependentNon-Executive Director 1 12.50%
Non-Executive Director 1 12.50%
Executive Director 4 50.00%
Management Staff 2 25.00%
Total 8 100.00%
Terms of Reference
Composition
The Human Resource Operations Committee shall be establishedand members thereto shall be appointed by the Board. TheCommittee shall have no fewer than three (3) members.
Responsibilities
The Human Resource Operations Committee is responsible forforecasting the manpower requirements and evaluation basedon the 5 years’ corporate goals.
Duties
The duties of the Human Resource Operations Committee are asfollows:-
1. to review the current organisation structure and manpowerconcerns of the Group;
2. to conduct a study into the current compensation and benefitsystem and, if necessary, to recommend changes thereto inconformance with the prevailing market rates;
3. to formulate employee recognition programme to retain andrecognise performing employees;
4. to formulate a 5 year organisation charts and set schedulefor human resources requirements planning for the Group;
5. to align the Human Resource’s role with the 5 years’ corporategoals; and,
6. to assess short and long term Human Resource performancerequirements.
BUSINESS DEVELOPMENT COMMITTEE
The Business Development Committee was established on 24th
May 2004. The Business Development Committee comprises thefollowing:-
Datuk Abdul Hamed Bin Haji Sepawi- Chairman
Non-Executive Chairman
Datuk Hasmi Bin Hasnan- Managing Director
Dr. Sharifuddin Bin Abdul Wahab- (appointed member of the Business Development Committee
on 27th April 2007)Deputy Managing Director
Ir. Suyanto Bin Osman- Executive Director
Kueh Hoi Chuang- Executive Director
Leong Chin Chiew- (resigned as Senior Head of Construction Division and
ceased to be a member of the Business DevelopmentCommittee on 4th October 2006)
Gordon Kab- (appointed member of the Business Development
Committee on 5th December 2006)Senior Head of Construction
The composition of executive, non-executive and managementparticipation in the Business Development Committee is asfollows:-
Category No. ofdirectors Percentage
Non-Executive Director 1 16.67%
Executive Director 4 66.66%
Management Staff 1 16.67%
Total 6 100%
Terms of Reference
Composition
The Business Development Committee shall be established andmembers thereto shall be appointed by the Board. The Committeeshall have no fewer than three (3) members.
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
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Responsibilities
The Business Development Committee is responsible foridentifying, exploring avenues, sourcing and locate opportunitiesand to lobby for potential projects to meet the 5 years’ corporategoals.
Duties
The duties of the Business Development Committee are as follows:-
a) to review the market analysis, feasibility studies andrecommendations for potential projects or contracts;
b) to conduct strategic analysis of projects, contracts, realestate deals and land acquisition deals;
c) to gather market intelligence and to understand both ourdirect and indirect competitors;
d) to develop contacts/exchanges of information and maintaingood relations with government, authorities, ministries,property developers and others; and,
e) to plan and implement strategies to develop new businessand opportunities.
BUSINESS PROCESSENGINEERING COMMITTEE
The Business Process Engineering Committee (BPEC) wasestablished on 24th May 2004. The BPEC comprises the followingmembers:-
Ir. Abang Jemat Bin Abang Bujang- Chairman
Non-Executive Director
Datuk Hasmi Bin HasnanManaging Director
Dr. Sharifuddin Bin Abdul Wahab- (appointed member of the Business Process Engineering
Committee on 27th April 2007)Deputy Managing Director
Ahmad Bin Abu Bakar- (appointed member of the Business Process Engineering
Committee on 28th April 2006)Executive Director
Ir. Suyanto Bin Osman- Executive Director
Kueh Hoi Chuang- Executive Director
Kho Teck Hock, Ricky- Head of Corporate Affairs
Teng Cheong Ming, Alan- (ceased to be member of the Business Process Engineering
Committee 14th May 2007)Technical Adviser
Leong Chin Chiew- (resigned as Senior Head of Construction Division and
ceased to be a member of the Business Process EngineeringCommittee on 4th October 2006)
Gordon Kab- (appointed member of the Business Process Engineering
Committee on 5th December 2006)Senior Head of Construction
Jeffrey Sim- Senior Human Resource Manager
Joseph Lee- ICT Manager
Secretary of BPE Committee
The composition of executive, non-executive and managementparticipation in the Business Process Engineering Committee is as follows:-
Category No. ofdirectors Percentage
Non-Executive Director 1 11.11%
Executive Director 5 55.56%
Management Staff 3 33.33%
Total 9 100.00%
Business Process Mapping (BPM) was identified as one of theBusiness Process Re-Engineering Projects recommended by theBPE Committee. BPM refers to activities involved in definingexactly what a business entity does, who is responsible, to whatstandard a process should be completed and how the success ofa business process can be determined. Once this is done, therecan be no uncertainty as to the requirements of every internalbusiness process.
The Business Process Map allows you to examine a businessprocess clearly, without the ‘distraction’ of the organizationalstructure. As with process charts, the usual approach is to mapa process ‘as is’ , to use this as the basis of analysis and review- in terms of identifying process steps that are the (potential)cause of bottlenecks, delays, barriers and errors - and to createa map of the re-engineered process to aid in ‘selling’ identifiedprocess improvements.
The motivations for choosing BPM include the following:
Formalize existing process and spot needed improvements.Adopting BPM forces a business to think through and formalizeits understanding of current processes. Along the way, thoserunning the business invariably spot potential improvements,such as the removal of steps, automation of manual steps,or the reengineering of a part or the whole of the flow.
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Facilitate automated, efficient process flow. Given that aprocess spans multiple activities, the less time spent betweenactivities, the better. When a BPM software is deployed, itdrives the process flow, downtime between activities is almostzero, unless the software itself is down. Even better, BPMsupports process parallelism, so that independent sequencesof work can be performed concurrently in isolation of eachother, with their results merged and synchronized later inthe flow.
Increase productivity and decrease head count. Get workdone faster with fewer people! This can be done throughautomation and decision laden applications.
Allow people to solve the hard problems. Although BPM isoften about removing or decreasing human participation in aprocess, one of its benefits is its flexibility to use people tohelp fix problems.
Simplify regulations and compliance issues. BPM helps buildingauditable processes that help the organization to complywith various regulatory requirements.
This project was completed in nine months with an electroniclibrary being built.
Terms of Reference
Composition
The BPEC shall be established and members thereto shall beappointed by the Board. The Committee shall have no fewerthan three (3) members.
Responsibilities
The BPEC is responsible for defining the necessary organizationalchanges that are required to achieve the 5 years’ corporategoals.
Duties
The duties of the BPEC are as follows:-
a) to review the current work-flows within the organisationstructure;
b) to detect process weak points and to modify processes wheregains can be obtained with low costs;
c) to establish and implement creative solutions based onbusiness models to ensure that the correct information issupplied to the right person at the right time in order to fulfillthe Group’s objectives; and,
d) to introduce control procedures to ensure that the changeprovides the expected improvement.
CORPORATE DISCLOSURECOMMITTEE (CDC)
The CDC was established on 21 March 2005. The CDC comprisesthe following:-
Datuk Hasmi Bin Hasnan- Chairman
Managing Director
Dr. Sharifuddin Bin Abdul Wahab- (appointed member of CDC on 27th April 2007)
Deputy Managing Director
Encik Ahmad Bin Abu Bakar- (appointed member of CDC on 28th April 2006)
Executive Director
Mr. Kho Teck Hock, Ricky- Head of Corporate Affairs
Ms. Bong Siu Lian- Company Secretary
The composition of executive, non-executive and managementparticipation in the CDC is as follows:-
Category No. ofdirectors Percentage
Executive Director 3 60.00%
Management Staff 2 40.00%
Total 5 100.00%
The CDC has been established to oversee all matters relating tocorporate disclosure policy and procedures.
The functions and responsibilities of the CDC include:
1) To promote and maintain market integrity and investorconfidence;
2) To ensure equal access to material information in an accurate,clear, timely and complete manner and to avoid selectivedisclosure;
3) To propagate the exercise of due diligence to ensure thatinformation disseminated will be as far as possible accurate,clear, timely and complete;
4) To instill an efficient management of information procedurethat promotes accountability for the dissemination of materialinformation;
5) To take advantage of advances made in informationtechnology in dissemination information; and,
6) To build good investor relations with the investing public thatinspires trust and confidence.
corporate governance
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
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BOARD AND DIRECTORS’PERFORMANCE EVALUATION
The performance of the Board is evaluated by the NominationCommittee and reviewed by the full Board. The evaluation isdone by a scoring system with weights being assigned to eachcomponent of critical issues.
The performance of each individual Director is reviewed by theRemuneration Committee in relation to other Board members’remuneration and “market gap”. The results are discussed withthe Chairman and approved by the Board.
CORPORATE DISCLOSURE POLICY
It is the policy of the Group to ensure informative, timely,accurate and complete disclosure of material informationconcerning Naim to the public. Naim recognizes that all investors,whether individual investors or institutional shareholders, shallhave equal access to material information through the widestpossible publicly disseminated disclosure. As mentioned earlier,(see Disclosure Policy in relation to Financial Reporting), theCompany is in the midst of improving its disclosure policies toinclude information that provides insight into the organisation’sstrategic future value creation potentials through its forward-looking statements. Although these policies have not beenperfected, this change of emphasis shall guide and direct anyfuture disclosures made by the Group.
Corporate Disclosure Policies and Procedures have been draftedfor implementation with the following objectives:
1) To raise awareness about, and provide guidance tomanagement concerning the Group’s disclosure requirementsand practices;
2) To provide guidance and structure in disseminating corporateinformation to, and in dealing with, investors, analysts, themedia and the investing public;
3) To ensure compliance with legal and regulatory requirementson disclosure of material information.
The Non-Executive Chairman and the Managing Director of Naimare designated as the main contacts for analysts, investors, themedia and others seeking information on financial and businessmatters. All Directors shall refer all formal and informal requestsfor information, comment, meetings, interviews or otherquestions from external sources to the Non-Executive Chairmanand the Managing Director. Authorised spokespersons shall notdisclose material information that has not been previously madepublic.
The Company’s website will be regularly updated with BursaMalaysia Securities releases.
SHAREHOLDER COMMUNICATION
The Group has formalized corporate disclosure policies andprocedures on communication with stakeholders.
The Company communicates with shareholders by way of theAnnual Report, Financial Statements, by announcing its quarterlyresults and through periodical Company announcements to themarket in general. The level of disclosure adopted in the AnnualReport and quarterly results are designed to go beyond thestatutory obligations,in order to serve as an effective means ofcommunication and information on the Group’s operations.
In addition, the investment community, comprising individuals,analysts, fund managers and other stakeholders, have dialogueswith the Group’s authorized representatives (the Chairman,Managing Director and Head of Corporate Affairs) on a regularbasis. This enables the investors to get a balanced understandingof their main issues and concerns affecting the Group. Non-Executive Directors may attend such meetings but are notexpected to provide information on Group performance.Discussions at such meetings are restricted to matters that are inthe public domain.
Annual General Meetings have been a main forum for dialoguewith shareholders. Ample opportunities are given to shareholdersto raise questions and/or seek clarification on the business andperformance of the Group.
The Company abides to the following main principles in its investorrelations:-
thoughtful analysis of our market value relative to estimatesof our intrinsic value, that is, the present value of our groupbased on a series of future expected net cash flows;
ensuring that all information divested to our investors areconsistent with our strategies, plans and actual performances;
providing transparency on our operations and performance;and
understanding our investor based and their requirements.
OTHER GUIDELINES
The Group Procedures and Authorities (GPA) and Board PolicyManual continue to be amended and adapted to the changingneeds of the Group’s operational activities while maintaining anadequate level of necessary checks and balances. During the year under review, Sub-contract awarding procedureswere introduced. The primary objective was to expedite theapproval process via delegation of authority to seniormanagement staff, with alignment of functions and subfunctionsaccording to operational needs and supported by proper set ofchecks and balances. As the Group grows or the focus of itsoperation shift, the appropriate oversight and control systemsmay have to be reviewed and changed. Formalized structures,processes and procedures encourage and support everyone towork in conformity and deter those who might be tempted to gooutside the guidelines.
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BUSINESS ETHICS
Business ethics aims at inculcating a sense of responsibility withinthe Group’s employees on how to conduct business. The field ofbusiness ethics is vast, encompassing areas such as corporategovernance reputation management, reliable accounting andaudits and has now extended to new domains such as corporatesocial responsibility.
The Group’s Code of Ethics guides the behaviour and performanceof all Employees and Directors. It sets forth how we conductourselves in our dealings with customers, employees, suppliers,partners, competitors and the community, seeking to improveevery facet of our business through processes and proceduresdesigned to optimise all our resources and expand opportunities. In addition, the Code helps ensure that all those who deal withthe Group are aware that they are dealing with a world-classcompany that adheres to high ethical, moral and businessstandards.
The Code was drawn up based on core values - INTEGRITY,HONESTY, RELIABILITY and RESPONSIBILITY - to our employees,customers, suppliers, communities and our shareholders.
The Code of Ethics will evolve over time, and new values mayemerge as the Company adapts itself to a changing businessenvironment. Nevertheless, the Code will continue to governour organizational culture and corporate and individual behaviour,to encourage higher standards of business and professionalintegrity while at the same time aligning effective businessperformance with ethical business conduct.
As important as the Code is, the Group recognizes that no set ofwritten rules can substitute for the good judgment, commonsense and professional integrity that has always been expectedof all Naim personnel in the course of their professional andpersonal activities.
CORPORATE SOCIALRESPONSIBILITY (CSR) STATEMENT
Naim’s commitment to CSR is echoed in its CorporateResponsibilities Statement as mentioned above.
Naim Group believes in good corporate citizen by creating jobs,paying tax, improving the standards of living, supportingsustainable economic growth, responding to disasters andsupporting the community. For further details, see SocialResposibility on page 69.
ENVIRONMENTAL RESPONSIBILITY
As society evolves towards a growing awareness of our eco-system, the business world is gradually following suit, realisingthat the interdependence between business growth andsustainable development is a significant mediating element in thelong term success. The manner in which a business reacts to itscorporate social responsibilities determines the benefits thatbusiness will derive; the more these responsibilities are integratedinto its everyday business activities, the greater the benefits willbe. Naim is slowly integrating the “eco-homes” approach into itsproperty developments, with added features like greenerlandscaping, better ventilation and maximum usage of naturalsunlight and airflows. Those benefits may manifest in the formof enhanced reputation, cost savings, improved staff moraleand greater customer loyalty, as well as contributing topreservation of the overall environment. For further details, seeCorporate Citizenship on page 68.
COMPENSATION OF DIRECTORS
The Remuneration Committee is responsible for formulating thecompensation arrangement for the Managing Director, DeputyManaging Director and other Executive Directors of the Company.The remuneration packages are structured to link rewards tocorporate goals and individual performance.
Upon consultation with the Chairman of the Company, theRemuneration Committee formulates the remuneration of theManaging Director. Remuneration package for Deputy ManagingDirector and Executive Directors will be determined uponconsultation with the Managing Director.
The remuneration for executive directors comprises 2 parts i.e.fixed and variable remuneration components. The fixedcomponent is the basic salary whereas the variable componentrelates to incentives tagged to targets and outcomes and theability to contribute to the long-term strategy of the organisation.Non-Executive Directors shall be eligible to the fixed componentand they are not eligible to participate in the variableperformance-linked incentive scheme.
The key objectives of the Company’s policy on executive directors’remuneration are as follows:
1) to attract and retain executives of the highest calibre;2) to reward them at the prevailing market rate; and3) to reward them in a way which promotes the creation of
shareholders’ value through a performance pegged toremuneration package, i.e. Key Performance Indices.
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NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
63
Fees paid by
Basic Salary Emoluments Allowance Company Subsidiary Benefit-in-kind Total
RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
Executive Directors
Datuk Hasmi Bin Hasnan 1,133 857 - - 7 25 2,022
Dr. Sharifuddin BinAbdul Wahab - - - 109 - - 109(Redesignated as DeputyManaging Director on 26February 2007)
Ahmad Bin Abu Bakar 350 76 - - - 45 471(appointed on 6 February 2006)
Ir. Suyanto Bin Osman 476 264 - - - 18 758
Kueh Hoi Chuang 347 182 - - 5 7 541
Abang Hasni Bin Abang Hasnan 136 64 - - - 21 221
Non-Executive Directors
Datuk Abdul Hamed Bin Sepawi - - 1,026 - - 25 1,051
YB Tuan Haji Hamden - - - 132 - - 132Bin Haji Ahmad
Ir. Abang Jemat - - - 109 - - 109Bin Abang Bujang
Datu Haji Abdul Rashid - - - 92 - - 92Bin Mohd Azis
Dato' Peter Anak Minos - - - 35 - - 35(resigned on 5 September 2005)
Sylvester Ajah Subah @ - - - - - - -Ajah bin Subah(appointed on 26 February 2007)
Professor Abang Abdullah Bin - - - - - - -Abang Mohamad Alli(appointed on 15 May 2007)
Total 2,442 1,443 1,026 477 12 141 5,541
The Company’s policy for non-executive directors is basically tooffer remuneration adequate to attract and retain individuals ofthe appropriate calibre who are able to apply sound independentjudgment based on extensive professional experience andknowledge.
Remuneration for Non-Executive Directors is recommended bythe Board and approved by shareholders at the annual generalmeeting.
No director is involved in determining his own remuneration.
Details of remuneration paid to each Director for the financialyear ended 31st December 2006 are as follows:
64
MANAGEMENT SUCCESSION
Management succession is implemented to ensure the availabilityand sustainability of capable executives who are ready to assumeprimary or critical roles.
The Remuneration Committee will oversee a process wherebythe qualities and characteristics necessary for effective Boardleadership are reviewed and updated, and will implement advanceplanning for contingencies affecting Executive Directors, DeputyManaging Director and the Managing Director. On the otherhand, the Managing Director, Deputy Managing Director,Executive Directors and Human Resource Operation Committeeshall ensure that the same process pertaining to managementsuccession be applied to senior members of management.
FINANCIAL REPORTING
Responsibility for the preparation of financial statements andreports has been delegated to the management, under thesupervision of Director of Finance and Operations. However,the Board of Directors through the Audit Committee will determinethat the reports are accurate and fairly present the Group’sfinancial position and results of its operations. At the same time,the Audit Committee has to ensure that the financial statementsare prepared in accordance with the appropriate and applicableMalaysian statutory accounting requirements and drawn up on aconsistent basis supported by prudent judgments and estimates.
The Audit Committee meets on a quarterly basis. The internalauditor, external auditor and relevant management staff areinvited to attend the Audit Committee meetings to discuss theresults of the audit examinations and financial reporting matters.
STATEMENT OFDIRECTORS’ RESPONSIBILITY
The Board of Directors is required by the Companies Act 1965 toprepare financial statements which give a true and fair view ofthe state of affairs of the Group and the Company as at the endof each financial year and of the results and cash flows of theGroup and the Company of the financial year.
The Board of Directors accepts responsibility for the integrity,objectivity and reliability of the financial statements of theCompany and the Group. All books and accounting records havebeen kept to support this. The Board of Directors upholds theprinciple of transparent reporting and delegating the responsibilityfor the preparation of the financial statements to themanagement.
The Board is pleased that adequate internal controls and systemsare maintained for providing a reasonable assurance that assetsare safeguarded based on policies and procedures implemented.The annual financial statements have been prepared on thefollowing basis:-
compliance with the approved accounting standards, theFinancial Reporting Standards (“FRS”), provisions of theCompanies Act 1965 and the Bursa Malaysia Securities BerhadListing Requirements;consistent application of the appropriate and relevantaccounting policies;reasonable prudent judgment and estimates; andon the going concern basis.
INTERNAL CONTROL SYSTEMS
The internal controls which set out approval limits for capitalexpenditure, investments, bank borrowings and chequesignatories are arranged at the Board level. Approval sublimitsare also provided at management level to facilitate operationalefficiency. The internal controls are designed to providereasonable assurance that transactions are conducted inaccordance with management’s authority and that the assetsare adequately protected against material loss or unauthorizedacquisition, use or disposition, and that the transactions areproperly authorized and recorded. The internal control systemsare described in full in the Statement of Internal Control on page67 of this annual report.
RELATIONSHIP WITH AUDITORS
The functions of the Audit Committee in relation to the externalauditors and internal auditors are set out in pages 44 to 46 ofthis Annual Report.
ADDITIONAL COMPLIANCE
In compliance with the Listing Requirements of Bursa MalaysiaSecurities, the following information is provided hereunder.
Share Buy-Back
During the financial year, the Company bought back 237,400shares from the open market as follows:
Date No. of Purchase Price Per Share Total Purchased Shares Consideration Highest Lowest Average RM
January 236,400 2.92 2.98 2.98 701,693.22
June 1,000 3.00 3.00 3.00 3,022.20
Total 237,400 704,715.42
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NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
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No resale of treasury shares took place during the financial yearended 31st December 2006.
237,400 shares were bought-back during the year and wereretained as treasury shares.
No shares were cancelled during the financial year ended 31st
December 2006.
Options, Warrants or Convertible Securities
No options, warrants or convertible securities were issued duringthe financial year under review.
American Depository Receipt (“ADR”) or GlobalDepository Receipt (“GDR”) Programme
The Company did not sponsor any ADR or GDR programmesduring the year under review.
Sanctions and Penalties
There were no sanctions or penalties imposed on the Company,its subsidiaries, directors and management during the financialyear.
Non-Audit Fees
The amount of non-audit fees paid to the external auditors bythe Group in the financial year ended 31st December 2006amounted to RM 116,700.00 for professional services renderedas per the following table.
* RM30,000 consists of:Consolidation fee 10,000Statement of Internal Control 15,000Review of Quarterly Announcement 8,000
33,000
Utilization of Proceeds (in RM’000)
Purposes As per Utilized as at BalanceProspectus 31.12.2006 Unutilized
Acquisition of land for propertydevelopment and property investment 25,000 6,039 18,961
Purchase of machinery 7,400 2,003 5,397
Purchase of information technology systems 3,082 3,079 3
Repayment of bank borrowings 7,430 6,857 573
Listing expenses 4,600 4,600 -
Working capital 13,036 13,036 -
Total 60,548 35,614 24,934
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Variation in Results
During the financial year under review, there were no significantvariations in results.
Profit Guarantee
During the financial year under review, there were no profitguarantees given by the Company.
Revaluation Policy
For the financial year under review, the Group had not adoptedany revaluation policy in relation to its landed properties.
Utilization of Proceeds
For the financial year ended 31st December 2006, proceeds wereutilized as per the following table.
corporate governance
Related Party Transactions
The related party transactions are disclosed on page 126 to 129of the Annual Report.
Material Contracts
There were no material contracts entered into by the Companyand/or its subsidiaries involving directors and major shareholders,either subsisting at the end of the financial year or since the endof the previous financial year.
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
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Introduction
This Statement on Internal Control
by the Board of Directors is made
pursuant to the Listing Requirements
of Bursa Malaysia Securities Berhad
Listing Requirement with regard to
the Group’s compliance with the
principles and best practices for
internal control as provided in the
Malaysian Code of Corporate
Governance (“the Code”).
The Board of Naim believes in good
corporate governance and managing
the affairs of the Group in
accordance with the Code. In
addition, the Board believes that it is
very much the voluntary good
behaviour and credibility of the Board
which will create a good governance
culture for the entire organization
and its business partners.
Responsibility
The Board acknowledges its responsibilities for maintaining a sound system of internal controlto safeguard shareholders’ investment and the Group’s assets as well as reviewing theadequacy and integrity of the system. The internal control system is a process that is put inplace at all levels of the organization to provide reasonable assurance that the Group’sbusiness objectives will be achieved. The system covers financial controls, operationalcontrols, compliance controls, as well as risk management. Because of the limitations thatare inherent in any system of internal control, it is designed to manage, rather than eliminate,the risk of failure to achieve corporate objectives. Accordingly, it can only provide reasonablebut not absolute assurance against material misstatement or loss.
Risk Management Framework
Risk management practices and internal control are embedded in the daily operations of theGroup, which has established a strategic enterprise-wide risk management framework. Thisframework involves identifying the risk exposure of the Group, developing key risk profiles/corporate risk scorecards as well as implementing a continuous risk monitoring system. TheRisk Management Committee (comprising representatives from the Board, the managementand the internal audit department) is continuously reviewing, upgrading and improving theGroup’s risk management practices.
Key Processes of Internal Control
Key processes of Internal Control are summarised as follows:
Organisational structure that lays down clear lines of responsibility and reporting.Budgetary control, where actual performance is regularly monitored against budgetsand variances are investigated.Group Procedures and Authorities Manual, which sets out the operating control procedurespertaining to finance, accounting, credit control, human resources, procurements andinventory. The control procedures, inter alia, include setting limits for approvingexpenditure and procurements.Staff handbook, that sets out general employment terms and the Group’s corporatecode of ethics.Quality management system requiring the management and staff of subsidiary, NaimCendera Sdn. Bhd. (accredited with ISO 9002 Certification since 2000) to adhere to a setof well-established standard operating procedures covering all major critical processes.Surveillance audits are conducted yearly to ensure compliance with the system.
Internal Audit
The Group has established a formal structure for its internal audit function that clearlydefines the roles and responsibilities of the persons involved in the internal audit. As anintegral part of the audit process, key areas of importance pertaining to internal control, riskassessment, risk mitigation and proper governance processes are identified. Focusing itsreview and audit on these key areas, the internal audit provides independent assurance onthe efficiency and effectiveness of the internal control system implemented by management.The internal audit reports to the audit committee, on a quarterly basis or earlier as appropriate.The chairman of the audit committee in turn presents summaries of the internal audit reports(including management’s responses to audit findings and recommendations) at Board meetings.
This statement is made in accordance with a resolution of the Board of Directors dated 27April 2007.
statement of internal control
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corporate citizenship
Environmental Responsibility
The Group’s environmental strategy is to minimize environmentalrisk from its activities, to improve the environment, where possibleand to implement environmental waste management. Theenvironment risk management strategy has been incorporatedin all the projects plan. The Group via its Health and SafetyDivision conducts training at all levels and ensures all contractorsand sub-contractors are aware of the Group’s environmentrequirements. The Group also aims to minimize any detrimentaleffects through its cleanliness campaign and implement measuresto prevent pollution arising from its work on the surroundingareas and to residents.
The Group will endeavour, where practicable, to preserve thenatural flora and fauna and watercourses. Where this is notpracticable, the Group will carry out environmental rehabilitationthrough the creation of landscaped parks and other green areas.
All site supervisors are responsible for the correct storage anddisposal of waste. No burning of waste is permitted. Tree buttsand other vegetation are removed from sites to avoid landcompaction and risks to remaining plant life. Wherever possible,construction waste is used for land refill, thus reducing the amountof waste from sites. Contractors and sub-contractors are requiredto deal not only with their respective waste at sites but alsopolluting matters in the form of concrete, debris etc.
The Group also endeavours to promote recycling and sustainableuse of materials wherever possible throughout its businessactivities, often with considerable success. For example, theapproach roads for the recently completed Balingian Bridge werebuilt up using scrap motor vehicle tyres, thus saving on disposalcosts and related environmental pollution.
NAIM CENDERA HOLDINGS BERHAD 69585467-M Incorporated in Malaysia
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
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Social Responsibility
Over the last 11 years, the Naim Group has donated generouslyto various social and charitable organizations. However, followingthe Group’s listing, the Board felt it necessary, for the sake oftransparency and good corporate governance, for the bulk ofthe Group’s charitable activities to be directed through adedicated special purpose vehicle. Therefore the Group set upthe Tabung Amanah Naim (Naim Trust Fund) on 12 September2004. The fund was launched with a corporate donation from theNaim Group, and personal donations from the Directors. Thesesums are topped-up and expanded on an annual basis by donationsfrom the Group and its subsidiaries. The Fund is controlled by aBoard of Trustees and has the following objectives:
To provide assistance, scholarships, incentives or awards forthe establishment, advancement or excellence in educationalor research work in MalaysiaTo provide assistance for the relief of distress amongst theMalaysian public.To provide assistance for the promotion of national unitythrough sports, arts and culture in Malaysia.To provide contributions for the purposes of religious worshipor advancement of religion.To make donations for other patriotic or charitable purposes.
Tabung Amanah Naim has been donating to deserving causes,principally student scholarships, social, religious and sportingorganizations, and educational charities.
naim group in the news
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NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
71
2006 diary of corporate events
72
Feb 12, 2006Chinese New Year Open House at Jade Showhouse, Desa Ilmu
Feb 18, 2006NAIM Staff attended briefing on ISO 2001
Feb 22-24, 2006NAIM’s Leadership Seminar 2006
Jan 19, 2006CEO Dialogue 2006
Feb 11, 2006Chinese New Year Open House at Viola Showhouse, MiriJan 19, 2006
Feb 11, 2006
Feb 22-24, 2006
2006 diary of corporate events
Mar 7, 2006 Official Handing Over of ILP Phase 1, Miri
Mar 8-11, 2006 NAIM Corporate Retreat 2006, Phuket Thailand
May 1, 2006 NAIM Labour Day Celebration at Desa Ilmu Kota Samarahan and Bandar Baru Permyjaya, Miri
May 9, 2006 Visit by Minister of Human Resource to ILP Phase 1, Miri
May 12, 2006 NAIM Project Operation Staff Attended workshop on Managing Construction Project and Creating Progress Report organized by PM Professional Resources at Sarawak Club, Kuching
May 23, 2006 Visit by Officers from Perbadanan Kemajuan Negeri Selangor (PKNS) to Desa Ilmu Kota Samarahan
May 25-28, 2006 NAIM joined SARBEX held at Permata Carpark Level 5, Kuching
Mar 8-11, 2006
May 1, 2006
May 9, 2006
May 23, 2006
May 25-28, 2006
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
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June 11-30, 2006
June 15, 2006
June 19, 2006
July 1-2, 2006
2006 diary of corporate events
74
June 11-30, 2006 Inaugural NAIM Gawai Festival 2006
June 15, 2006 NAIM 4th Annual General Meeting 2006
June 19, 2006 A courtesy call by Brunei’s Ministry of Development & Housing Development Department to NAIM’s Miri site operation office at Bandar Baru Permyjaya
July 1-2, 2006 NAIM Sales Team attended a workshop organized by SK Brothers at Harbour View Hotel, Kuching
July 10-11, 2006 NAIM host Arab Princes’ visit to Kuching and Bandar Baru Permyjaya, Miri
July 10-11, 2006
June 11-30, 2006
June 15, 2006
June 19, 2006
July 1-2, 2006
June 11-30, 2006Inaugural NAIM Gawai Festival 2006
June 15, 2006NAIM 4th Annual General Meeting 2006
June 19, 2006A courtesy call by Brunei’s Ministry of Development & Housing Development Department to NAIM’s Miri site operation office at Bandar Baru Permyjaya
July 1-2, 2006NAIM Sales Team attended a workshop organized by SK Brothers at Harbour View Hotel, Kuching
July 10-11, 2006NAIM host Arab Princes’ visit to Kuching and
July 10-11, 2006
Aug 26, 2006NAIM’s staff donated 10 wheel chair to Persatuan Bekas Parajurit Malaysia, Sarawak Branch
Sept 7, 2006 Moon Cake Festival held atHeliconia Showhouse, Desa Pujut 2 Bandar Baru Permyjaya, Miri
Sept 16-17, 2006 Kuching Office Team Building & Family Day held at Santubong Resort, Kuchingwith a selected theme for the year known as ‘Unite’
Aug 21, 2006 Tabung Amanah NAIM awarded scholarships to 5 undergraduates from Faculty of Engineering, University Malaysia Sarawak
Aug 19-Sept 16, 2006 NAIM Merdeka Fest held at Showhouse Village, Desa Pujut 2, Bandar Baru Permyjaya, Miri
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
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Aug 19-Sept 16, 2006
Aug 21, 2006
Aug 26, 2006
2006 diary of corporate events
76
Oct 17, 2006Majlis Khatamal Quran & Sumbangan Derma to selected Masjid & Surau, Kota Samarahan held at Masjid Al Mutaqim, Kota Samarahan
Oct 20, 2006Majlis Berbuka Puasa & Sumbangan Derma to selected Masjid & Surau, Miri Division held at Masjid Darul Ehsan, Piasau Jaya, Miri
Nov 4, 2006NAIM Miri Sales Office organized Hari Raya Open House held at Heliconia showhouse, Bandar Baru Permyjaya, Miri
Nov 9-10, 2006Visit by representative from Capitaland Mr Yong Kei Seng to Kuching and NAIM’s property site
Nov 11, 2006Tabung Amanah NAIM donated RM50,000 to Lembaga Amanah Masjid Bahagian Samarahan at the Majlis Ramah Tamah Hari Raya Bersama CM in Asajaya
Nov 11-12, 2006Miri Office Team Building & Family Day held at Park City Hotel, Miri with ‘Jalinan Mesra’ was seleted as a Family Day theme for the year
Oct 17, 2006
Oct 20, 2006
Nov 4, 2006
Nov 9-10, 2006
Nov 11, 2006
Nov 11-12, 2006
Nov 18-19, 2006NAIM Sales Department Kuching held a roadshow at BCBB Satok Kuching
Dec 13, 2006NAIM’s Property Investment & Overseas Business Division with NAIM’s MD paid a courtesy call on the Minister of Development, Brunei.
Nov 13, 2006NAIM’s Managing Director, Datuk Hasmi bin Hasnan was awarded the Sarawak State Entrepreneur of The Year 2006 by the Sarawak Chamber of Commerce & Industry
Nov 17, 2006NAIM’s Managing Director, Datuk Hasmi bin Hasnan was awarded Anugerah Usahawan Bumiputera 2005/2006 Kategori Anugerah Presiden by Dewan Usahawan Bumiputera Sarawak
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
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Nov 13, 2006
Nov 17, 2006
Nov 18-19, 2006
78
economic outlook
Outlook for The Malaysian Economy
The following are independent opinions from authoritative sourceson the outlook for the Malaysian economy for 2007 and beyond.Unless otherwise stated these organizations have no connectionwith the Naim Group or its subsidiaries. All statements are copyrightof their respective originators and are reproduced here underthe rule of fair comment.
Public Bank Bhd chairman Tan Sri Dr Teh Hong Piow(Quoted in The Edge Daily)
We are confident that the Malaysian economy will continue toadvance in line with its potential rate of growth. The respectableeconomic performance in the first half of this year shows thatthe Malaysian economy is resilient to high oil prices and highglobal interest rates. We are confident that we can leverage onthis economic resilience to further grow and deal with challengesin 2007. In addition, the economy can leverage on its strongfundamentals and resources to generate growth next year.Based on this, we are of the view that the projected GDP growthof 6% for 2007 is credible and achievable. At this juncture, wedo not anticipate any major bottleneck ahead that will significantlyderail the growth outlook.
Institute of Developing Economies -Japan External TradeOrganization
2007 Economic Outlook for East Asia
Malaysia’s Economy Will Secure Stable Growth, in Spite of SlowingGrowth of Both Domestic and External Demand.
In 2007, Malaysia’s economy will see its exports grow at adecelerating rate in succession to 2006. The growth rate of totaldomestic demand will also fall. However, consumer confidencewill remain high, supported by the stabilization of the labor market,and private consumption is forecast to slow, but to still grow bya higher rate than the income growth rate. The value of theringgit, which was switched to a managed floating exchangerate regime in 2005, is expected to remain stable, and theinvestment climate will remain favorable during the year. Thegrowth rate of private investment is forecast to decrease by justa small margin compared with the 2006 rate. Consequent uponthese factors, the Malaysian economy is forecast to secure astable growth rate of 5.2% in 2007, slowing by 0.5 percentagepoint from 2006. The inflation rate of general prices is also forecastto decrease by 0.6 percentage points from 2006. (from 2007Economic Outlook for East Asia)
Bank Negara MalaysiaAnnual Report 2006
Supported by sustained global growth and resilient domesticdemand, the Malaysian economy is expected to register solidgrowth in 2007, with real GDP expanding by 6%. This pace isconsistent with the expansion in productive capacity followingthe strengthening of the recovery in capital formation. In 2007,investment, particularly private investment, is expected to playa major role in sustaining growth as strong domestic and externaldemand, coupled with high levels of capacity utilisation, inducedfirms to expand capacity. In addition, investment activity by thepublic sector is also expected to expand substantially with thecommencement of work on infrastructure and other projectsunder the Ninth Malaysia Plan (9MP). Firm-level investment isalso expected to benefit from the reduction in the corporate taxrate that was announced in the 2007 Budget, while ample liquidityin the financial system will ensure funding would be adequate.
Tradewatch (Australian Government)Malaysia Country Briefing, Feb 2007
The Malaysian economy grew by 5.3 per cent in 2005. The IMFforecasts GDP growth in 2006 at 5.5 per cent, and 5.8 per centin 2007. This growth forecast is based on sustained globaleconomic growth and high prices for primary commodities(including crude petroleum and palm oil). Ongoing challenges toMalaysia’s strong economic performance include increasedcompetition from other emerging markets in the region andincreasing global inflation pressures.
Malaysia continues to have a large trade surplus (since November1997) with total exports registering an increase of 10.7 per centfor the year to November 2006, and total imports up 11.6 percent for the year to November 2006. The trade surplus wasunderpinned by strong growth in manufactured exports and highprices for commodity exports.
Inflation was 3.1 per cent for the year to December 2006, althoughthere are emerging signs of inflationary pressure. Theunemployment rate was 3.1 per cent in the third quarter of 2006and is expected to remain below 4 per cent in 2007.
Outlook for The Sarawak Economy
Sarawak State Government
The global economic environment is expected to remain robustand dynamic right up to the next decade, with both the industrialand developing countries anticipated to maintain sustainableoutput growth. Global trade is predicted to expand by about8%. This continuing favourable external outlook should keep thehigh growth momentum of the nation’s economy at a steady andstable level.
80 directors’ report
83 statement by directors
84 statutory declaration
85 report of the auditors
86 balance sheets
88 income statements
89 statement of changes in equity
91 cash flow statements
94 notes to the financial statements
132 analysis of shareholdings
134 list of properties
138 notice of annual general meeting
143 form of proxy
financial statements
The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the yearended 31 December 2006.
Principal activitiesThe Company is principally engaged in investment holding and provision of management services to subsidiaries while the principalactivities of the subsidiaries are as stated in Note 5 to the financial statements. There has been no significant change in the nature ofthese activities during the financial year.
Results
Group CompanyRM’000 RM’000
Profit for the year 66,229 35,300
DividendsSince the end of the previous financial year, the Company paid:
i) a second interim dividend of 5.0 sen per ordinary share less tax at 28% totalling RM8,801,698(equivalent to 3.6 sen net per ordinary share) in respect of the year ended 31 December 2005 on 8 March 2006; and
ii) a interim dividend of 15.0 sen per ordinary share less tax at 28% totalling RM26,405,093(equivalent to 10.8 sen net per ordinary share) in respect of the year ended 31 December 2006 on 5 June 2006.
The Directors do not recommend any final dividend to be paid for the year under review.
Reserves and provisionsThere were no material transfers to or from reserves and provisions during the year under review except as disclosed in the financialstatements.
Directors of the CompanyDirectors who served since the date of the last report are:
Datuk Abdul Hamed Bin Haji SepawiDatuk Hasmi Bin HasnanDr. Sharifuddin Bin Abdul WahabIr. Suyanto Bin OsmanAhmad Bin Abu BakarKueh Hoi ChuangAbang Hasni Bin Abang HasnanY.B. Tuan Haji Hamden Bin Haji AhmadIr. Abang Jemat Bin Abang BujangDatu Haji Abdul Rashid Bin Mohd AzisSylvester Ajah Subah @ Ajah Bin Subah (appointed on 26.02.2007)
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for the year ended 31 december 2006directors’ report
The holdings and deemed holdings in the ordinary shares of the Company and of its related corporations (other than wholly-ownedsubsidiaries) of the Directors in office at year end as recorded in the Register of Directors’ Shareholdings are as follows:
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
81
Number of ordinary shares of RM1.00 eachAt At
1.1.2006 Bought Sold 31.12.2006
Shareholdings in the Company inwhich Directors have direct interest
Datuk Abdul Hamed Bin Haji Sepawi 13,555,100 - - 13,555,100Datuk Hasmi Bin Hasnan 28,918,850 - - 28,918,850Dr. Sharifuddin Bin Abdul Wahab 100,000 - - 100,000Ir. Suyanto Bin Osman 135,000 - - 135,000Kueh Hoi Chuang 144,100 - - 144,100
Shareholdings in which Datuk Abdul Hamed BinHaji Sepawi has deemed interests
None of the other Directors in office at 31 December 2006 had any interest in the ordinary shares of the Company and of itsrelated corporations during the financial year.
Directors’ benefitsSince the end of the previous financial year, no Director of the Company has received nor become entitled to receive any benefit (otherthan a benefit included in the aggregate amount of emoluments received or due and receivable by certain Directors as shown in thefinancial statements of the Company or its related companies, as the case may be) by reason of a contract made by the Company or arelated corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has asubstantial financial interest, other than certain Directors who have significant financial interests in companies which traded with certaincompanies in the Group in the ordinary course of business.
There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the Company toacquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.
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Issue of sharesThere were no changes in the authorised, issued and paid-up capital of the Company during the financial year.
Options granted over unissued sharesNo options were granted to any person to take up unissued shares of the Company during the year.
Other statutory informationBefore the income statements and balance sheets of the Group and of the Company were made out, the Directors took reasonable stepsto ascertain that:
i) all known bad debts have been written off and adequate provision made for doubtful debts, and
ii) all current assets have been stated at the lower of cost and net realisable value.
At the date of this report, the Directors are not aware of any circumstances:
i) that would render the amount written off for bad debts, or the amount of the provision for doubtful debts, in the Group and inthe Company inadequate to any substantial extent, or
ii) that would render the value attributed to the current assets in the financial statements of the Group and of the Companymisleading, or
iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of theCompany misleading or inappropriate, or
iv) not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financialstatements of the Group and of the Company misleading.
At the date of this report, there does not exist:
i) any charge on the assets of the Group and of the Company that has arisen since the end of the financial year and which securesthe liabilities of any other person, or
ii) any contingent liability in respect of the Group and of the Company that has arisen since the end of the financial year.
No contingent liability or other liability of the Group and of the Company has become enforceable, or is likely to become enforceablewithin the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantiallyaffect the ability of the Group and of the Company to meet their obligations as and when they fall due.
In the opinion of the Directors, the results of the operations of the Group and of the Company for the financial year ended 31December 2006 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has anysuch item, transaction or event occurred in the interval between the end of that financial year and the date of this report.
AuditorsThe auditors, Messrs KPMG, have indicated their willingness to accept re-appointment.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:
Datuk Abdul Hamed Bin Haji Sepawi Datuk Hasmi Bin Hasnan
Kuching,
Date: 27 April, 2007
for the year ended 31 december 2006directors’ report
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In the opinion of the Directors, the financial statements set out on pages 86 to 131 are drawn up in accordance with the provisions of theCompanies Act, 1965 and applicable approved accounting standards for entities other than private entities issued by the MalaysianAccounting Standards Board, so as to give a true and fair view of the state of affairs of the Group and of the Company at 31 December2006 and of the results of their operations and cash flows for the year ended on that date.
Signed in accordance with a resolution of the Directors:
Datuk Abdul Hamed Bin Haji Sepawi
Datuk Hasmi Bin Hasnan
Kuching,
Date: 27 April, 2007
statements by directors pursuant to Section 169(15)of the Companies Act, 1965
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I, Ahmad Bin Abu Bakar, the Director primarily responsible for the financial management of Naim Cendera Holdings Berhad, do solemnlyand sincerely declare that the financial statements set out on pages 86 to 131 are, to the best of my knowledge and belief, correct andI make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory DeclarationsAct, 1960.
Subscribed and solemnly declared by the abovenamed
in Kuching in the State of Sarawak
on 27 April, 2007 Ahmad Bin Abu Bakar
Before me:
statutory declaration pursuant to Section 169(16)of the Companies Act, 1965
PETER SIM HOI PENGPeasuruhjaya Sumpah,
Lot 9691, 1st Floor,Jalan Datuk Abang Abdul Rahim,
93450 Kuching,Sarawak.
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We have audited the financial statements set out on pages 86 to 131. The preparation of the financial statements is the responsibility ofthe Company’s Directors.
It is our responsibility to form an independent opinion, based on our audit, on the financial statements and to report our opinion to you,as a body, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We do not assume responsibility to anyother person for the content of this report.
We conducted our audit in accordance with approved Standards on Auditing in Malaysia. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made by the Directors, as well as evaluating the overall financialstatements presentation. We believe our audit provides a reasonable basis for our opinion.
In our opinion:
a) the financial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicableapproved accounting standards for entities other than private entities issued by the Malaysian Accounting Standards Board so as togive a true and fair view of:
i. the state of affairs of the Group and of the Company at 31 December 2006 and the results of their operations and cash flows forthe year ended on that date; and
ii. the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements of the Group and ofthe Company; and
b) the accounting and other records and the registers required by the Companies Act, 1965 to be kept by the Company and thesubsidiaries have been properly kept in accordance with the provisions of the said Act.
We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financial statementsare in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and wehave received satisfactory information and explanations required by us for those purposes.
The audit reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any commentmade under subsection (3) of Section 174 of the Act.
Net cash from/(used in) operating activities 42,201 55,560 4,342 (13,111)
for the year ended31 december 2006cash flow statements
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Group Company2006 2005 2006 2005
RM’000 RM’000 RM’000 RM’000
Cash flows from investing activities
Acquisition of minority interest in an existing subsidiary (Note 28) (45) - - -Additional investment in an associate (980) - - -Acquisition of intangible asset (Note 8) (2,836) - - -Proceeds from disposal of property, plant and equipment 102 50 - -Acquisition of other investments (8) (16) - -Acquisition of property, plant and equipment [Note (i)] (8,516) (9,182) - -Decrease in deposits pledged to banks 459 2,741 - -Dividends received 128 183 35,712 25,344
Net cash (used in)/from investing activities (11,696) (6,224) 35,712 25,344
Cash flows from financing activities
Repurchase of treasury shares (Note 17) (705) (11,026) (705) (11,026)Repayment of hire purchase loans (304) (640) - -Dividends paid to:- shareholders of the Company (35,207) (24,931) (35,207) (24,931)- minority shareholders of subsidiaries (5,675) (5,830) - -Interest paid (74) (81) - -
Net cash used in financing activities (41,965) (42,508) (35,912) (35,957)
Net (decrease)/increase in cash and cash equivalents (11,460) 6,828 4,142 (23,724)Cash and cash equivalents at 1 January 131,817 124,989 24,643 48,367
Cash and cash equivalents at 31 December [Note (ii)] 120,357 131,817 28,785 24,643
cash flow statements for the year ended31 december 2006 (continued)
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Notes
i) Acquisition of property, plant and equipment
During the financial year, the Group acquired property, plant and equipment as follows:
Group2006 2005
RM’000 RM’000
Paid using internal funds 8,516 9,182Financed by hire purchase loans 1,750 -
10,266 9,182
ii) Cash and cash equivalents
Cash and cash equivalents included in the cash flow statements comprise the following balance sheet amounts:
Group Company2006 2005 2006 2005
RM’000 RM’000 RM’000 RM’000
Deposits (excluding deposits pledged) 45,603 67,599 10,122 9,102Short term cash funds 45,000 13,000 17,500 13,000Cash and bank balances 29,754 51,218 1,163 2,541
120,357 131,817 28,785 24,643
The notes on pages 94 to 131 are an integral part of these financial statements.
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Naim Cendera Holdings Berhad is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Boardof Bursa Malaysia Securities Berhad (“Bursa Malaysia”). The address of its registered office and principal place of business is as follows:
Registered office/Principal place of business9th Floor, Wisma Naim2½ Miles, Rock Road93200 KuchingSarawak, Malaysia.
The consolidated financial statements as at and for the year ended 31 December 2006 comprise the Company and its subsidiaries(together referred to as the Group) and the Group’s interest in associates, jointly controlled entities and unincorporated joint ventures.
1. Basis of preparation
a) Statement of compliance
The financial statements of the Group and of the Company have been prepared in accordance with applicable approvedaccounting standards for entities other than private entities issued by the Malaysian Accounting Standards Board (MASB),accounting principles generally accepted in Malaysia and the provisions of the Companies Act, 1965. These financial statementsalso comply with the applicable disclosure provisions of the Listing Requirements of Bursa Malaysia.
The MASB has issued the following new and revised Financial Reporting Standards (FRSs) and Interpretations that are effectivefor annual periods beginning after 1 January 2006, and that have not been applied in preparing these financial statements:
(i) FRS 117, Leases - This FRS is effective for annual periods beginning on or after 1 October 2006. By virtue of the exemptionin paragraph 67B of FRS 117, the impact of applying FRS 117 on the financial statements upon first adoption of this standardas required by paragraph 30(b) of FRS 108, Accounting Policies, Changes in Accounting Estimates and Errors, is notdisclosed.
(ii) FRS 124, Related Party Disclosures – This FRS is effective for annual periods beginning on or after 1 October 2006. By virtueof the exemption in paragraph 22A of FRS 124, the impact of applying FRS 124 on the financial statements upon firstadoption of this standard as required by paragraph 30(b) of FRS 108 is not disclosed.
(iii) FRS 139, Financial Instruments: Recognition and Measurement – This FRS has been issued by the MASB but the MASB hasyet to announce the effective date of this standard. By virtue of the exemption in paragraph 103AB of FRS 139, the impactof applying FRS 139 on the financial statements upon first adoption of this standard as required by paragraph 30(b) of FRS108 is not disclosed.
(iv) Amendment to FRS 1192004, Employee Benefits – Actuarial Gains and Losses, Group Plans and Disclosures – Certain amendmentsmade to FRS 1192004 are effective for annual periods beginning on or after 1 January 2007. The adoption of these amendmentsdoes not have any significant impact on the financial statements of the Group in the period of initial application.
(v) FRS 6, Exploration for and Evaluation of Mineral Resources – This FRS is effective for the annual periods beginning on or after1 January 2007. This standard is not applicable to the Group.
(vi) Amendment to FRS 121, The Effect of Changes in Foreign Exchange Rates: Net Investment in a Foreign Operation - Certainamendments made to FRS 121 are effective for annual periods beginning on or after 1 July 2007. The adoption of theseamendments does not have any significant impact on the financial statements of the Group in the period of initial application.
(vii)6 Interpretations (IC Int.) that are effective for annual periods beginning on or after 1 July 2007.IC Int. 1, Changes in Existing Decommissioning, Restoration and Similar LiabilitiesIC Int. 2, Members’ Shares in Co-operative Entities and Similar InstrumentsIC Int. 5, Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation FundsIC Int. 6, Liabilities arising from Participating in a Specific Market – Waste Electrical and Electronic EquipmentIC Int. 7, Applying the Restatement Approach under FRS 1292004 Financial Reporting in Hyperinflationary EconomiesIC Int. 8, Scope of FRS 2
The initial application of these Interpretations is not expected to have any material impact on the financial statements of theGroup entities.
financial statementsnotes to the
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1. Basis of preparation (continued)
a) Statement of compliance (continued)
The Group entities do not plan to early adopt any of the new or revised FRSs and Interpretations listed above, but to apply theapplicable and relevant ones beginning in the annual periods in which they are effective.
The effect of adoption of the new and revised FRSs in 2006 on the financial statements is set out in Note 31.
The financial statements were approved by the Board of Directors on 27 April 2007
b) Basis of measurement
The financial statements have been prepared on the historical cost basis.
c) Functional and presentation currency
These financial statements are presented in Ringgit Malaysia (RM), which is the Group’s functional currency. All financial informationpresented in RM has been rounded to the nearest thousand, unless otherwise stated.
d) Use of estimates and judgements
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect theapplication of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differfrom these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in theperiod in which the estimate is revised and in any future periods affected.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policiesthat have the most significant effect on the amounts recognised in the financial statements are described in the following notes:
(i) Construction activities
The Group recognises contract revenue and costs in the income statement using the percentage of completion method. Thestage of completion is determined by reference to the proportion that contract costs incurred for contract work performedto date bear to the estimated total contract costs.
Significant judgement is required in determining the stage of completion of construction activities, accrual of costs incurredfor which claims/billings have yet to be received, estimated total contract revenue and contract costs as well as recoverabilityof the carrying amount of contract work-in-progress. Total contract revenue also includes an estimation of variations that arerecoverable from contract customers. The Group relies when making the estimations and judgements on, inter alia, pastexperiences and the assessment of its experienced project team (comprising Budget Review Committee, project managersand quantity surveyors).
(ii) Property development activities
The Group recognises property development revenue and costs in the income statement using the stage of completionmethod. The stage of completion of properties sold is determined by reference to the proportion that property developmentcosts incurred for work performed to date bear to the estimated total property development costs.
Significant judgement is required in determining the stage of completion of development activities, extent of propertydevelopment costs incurred, estimated total property development revenue and costs as well as recoverability of thedevelopment projects. In making such estimations and judgements, the Group relies, as with the construction activitiesexplained above, inter alia, on past experiences and the assessment of its experienced project team (comprising BudgetReview Committee, project managers and quantity surveyors).
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2. Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these financial statements, and havebeen applied consistently by Group entities, unless otherwise stated.
Certain comparative amounts have been reclassified to conform with the current year’s presentation (see Note 32).
a) Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists when the Group has the ability to exercise its power togovern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control,potential voting rights that presently are exercisable are taken into account.
The financial statements of subsidiaries are included in the consolidated financial statements from the date that controlcommences until the date that control ceases.
Investment in subsidiaries is stated in the Company’s balance sheet at cost less impairment losses, unless the investment isclassified as held for sale (or included in a disposal group that is classified as held for sale).
(ii) Minority interest
Minority interest at the balance sheet date, being the portion of the net identifiable assets of subsidiaries attributable toequity interests that are not owned by the Company, whether directly or indirectly through subsidiaries, are presented in theconsolidated balance sheet and statement of changes in equity within equity, separately from equity attributable to theequity shareholders of the Company. Minority interest in the results of the Group is presented on the face of the consolidatedincome statement as an allocation of the total profit or loss for the year between minority interest and the equity shareholdersof the Company.
Where losses applicable to the minority exceed the minority’s interest in the equity of a subsidiary, the excess, and anyfurther losses applicable to the minority, are charged against the Group’s interest except to the extent that the minority hasa binding obligation to, and is able to, make additional investment to cover the losses. If the subsidiary subsequently reportsprofits, the Group’s interest is allocated with all such profits until the minority’s share of losses previously absorbed by theGroup has been recovered.
(iii) Associates
Associates are entities in which the Group has significant influence, but not control, over the financial and operating policies.
Associates are accounted for in the consolidated financial statements using the equity method unless it is classified as heldfor sale (or included in a disposal group that is classified as held for sale). The consolidated financial statements include theGroup’s share of the income and expenses of the equity accounted associates, after adjustments to align the accountingpolicies with those of the Group, from the date that significant influence commences until the date that significant influenceceases.
When the Group’s share of losses exceeds its interest in an equity accounted associate, the carrying amount of that interest(including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to theextent that the Group has an obligation to make, or has made, payments on behalf of the investee.
Investment in associates is stated in the Group’s balance sheet at cost less impairment losses, unless the investment isclassified as held for sale (or included in a disposal group that is classified as held for sale).
(iv) Joint ventures
Jointly-controlled entities
Joint ventures are those entities over whose activities the Group has joint control, established by contractual agreement andrequiring unanimous consent for strategic financial and operating decisions.
Joint ventures are accounted for in the consolidated financial statements using the equity method unless it is classified as heldfor sale (or included in a disposal group that is classified as held for sale). The consolidated financial statements include theGroup’s share of the income and expenses of the equity accounted joint ventures, after adjustments to align the accountingpolicies with those of the Group, from the date that joint control commences until the date that joint control ceases.
financial statementsnotes to the (continued)
When the Group’s share of losses exceeds its interest in an equity accounted joint venture, the carrying amount of thatinterest (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except tothe extent that the Group has an obligation to make, or has made, payments on behalf of the joint venture.
Investment in joint ventures are stated in the Group’s balance sheet at cost less impairment losses, unless the investment isclassified as held for sale (or included in a disposal group that is classified as held for sale).
Jointly-controlled operations
The interest of the Group in unincorporated joint ventures are brought to account by recognising in its financial statementsthe assets it controls and the liabilities that it incurs, and the expenses it incurs and its share of income that it earns from thesale of goods or services by the joint venture.
(v) Changes in Group composition
Where a subsidiary issues new equity shares to minority interest for cash consideration and the issue price has beenestablished at fair value, the reduction in the Group’s interests in the subsidiary is accounted for as a disposal of equityinterest with the corresponding gain or loss recognised in the income statement.
When a group purchases a subsidiary’s equity shares from minority interest for cash consideration and the purchase price hasbeen established at fair value, the accretion of the Group’s interests in the subsidiary is accounted for as a purchase of equityinterest for which the acquisition method of accounting is applied.
The Group treats all other changes in group composition as equity transactions between the Group and its minority shareholders.Any difference between the Group’s share of net assets before and after the change, and any consideration received orpaid, is adjusted to or against Group reserves.
(vi) Transactions eliminated on consolidation
Intra-group balances, and any unrealised income and expenses arising from intra-group transactions, are eliminated inpreparing the consolidated financial statements.
Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to theextent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but onlyto the extent that there is no evidence of impairment.
b) Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the assets and any other costs directlyattributable to bringing the assets to working condition for their intended use, and the costs of dismantling and removing theitems and restoring the site on which they are located. The cost of self-constructed assets includes the costs of materials anddirect labour. Purchased software that is integral to the functionality of the related equipment is capitalised as part of thatequipment.
The cost of property, plant and equipment recognised as a result of a business combination is based on fair value atacquisition date. The fair value of property is the estimated amount for which a property could be exchanged between awilling buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each actedknowledgeably, prudently and without compulsion. The fair value of other items of plant and equipment is based on thequoted market prices for similar items.
When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for asseparate items (major components) of property, plant and equipment.
(ii) Subsequent costs
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it isprobable that the future economic benefits embodied within the part will flow to the Group and its cost can be measuredreliably. The carrying amount of those parts that are replaced is derecognised. The costs of the day-to-day servicing ofproperty, plant and equipment are recognised in the income statement as incurred.
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(iii) Depreciation
Depreciation is recognised in the income statement on a straight-line basis over the estimated useful life of each part of anitem of property, plant and equipment. Leasehold land is amortised equally over its remaining lease terms. Property, plantand equipment under construction are not depreciated until the assets are ready for their intended use.
The estimated useful lives for the current and comparative periods are as follows:
Buildings 2% - 10%Furniture and fittings 10% - 50%Motor vehicles 20%Office and factory equipment 10% - 50%Plant and machinery 10% - 20%
The depreciable amount is determined after deducting the residual value. Depreciation methods, useful lives and residualvalues are reassessed at the reporting date.
c) Investment property
Investment property is a property which is owned or held under a leasehold interest to earn rental income or is for capitalappreciation or for both.
Investment property is stated at cost less accumulated depreciation, consistent with the accounting policy for property, plantand equipment as stated in accounting policy Note 2 (b).
In the previous years, the investment property was included in property, plant and equipment. Following the adoption of FRS140, Investment Property, the investment property is now classified separately. Transfers between investment property andproperty, plant and equipment do not change the carrying amount and the cost of the property transferred.
d) Intangible assets
(i) Goodwill
Goodwill/negative goodwill arises on the acquisition of subsidiaries, associates and joint ventures.
For acquisitions prior to 1 January 2006, goodwill represents the excess of the cost of the acquisition over the Group’sinterest in the fair values of the net identifiable assets and liabilities.
With the adoption of FRS 3 beginning 1 January 2006, goodwill represents the excess of the cost of the acquisition over theGroup’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree.
Before adoption of FRS 3, goodwill was measured at cost less accumulated amortisation and impairment losses. Goodwill/negative goodwill was amortised/recognised in the income statement over five years. Impairment tests on goodwill wereperformed when there were indications of impairment.
Following the adoption of FRS 3, goodwill is allocated to cash generating units and measured at cost. It is no longer amortisedbut is tested annually for impairment or more freguently if events or changes in circumstances indicate that it might beimpaired. When the excess is negative (negative goodwill), it is recognised immediately in the income statement. The carryingamount of negative goodwill at 1 January 2006 is derecognised with a corresponding adjustment to the opening balance ofretained earnings.
In respect of equity accounted investees, the carrying amount of goodwill is included in the carrying amount of theinvestment. The entire carrying amount of the investment is tested for impairment when there is objective evidence ofimpairment.
Acquisition of minority interest
Goodwill arising on the acquisition of a minority interest in a subsidiary represents the excess of the cost of the additionalinvestment over the carrying amount of the net assets acquired at the date of exchange.
(ii) Rights to additional interest in construction contract
This comprises the rights to additional interest in a construction contract acquired from a joint venture partner. It is statedat cost less accumulated amortisation and impairment losses.
Amortisation is charged to the income statement based on the stage of completion of the contract.
financial statementsnotes to the (continued)
e) Investment in equity securities
Investment in equity securities are recognised initially at cost plus attributable transaction costs.
Subsequent to initial recognition, investment in non-current equity securities, other than investment in subsidiaries, associatesand joint ventures, are stated at cost less allowance for diminution in value.
Where in the opinion of the Directors, there is a decline other than temporary in the value of non-current equity securities otherthan investment in subsidiaries, associates and joint ventures, the allowance for diminution in value is recognised as an expensein the financial year in which the decline is identified.
On disposal of an investment, the difference between net disposal proceeds and its carrying amount is recognised in the incomestatement.
f) Land held for property development
Land held for property development consists of land or such portions thereof on which no development activities have beencarried out or where development activities are not expected to be completed within the Group’s normal operating cycle of 2 to3 years. Such land is classified as non-current asset and is stated at cost less accumulated impairment losses.
Land held for property development is reclassified as property development costs at the point when development activities havecommenced and where it can be demonstrated that the development activities can be completed within the Group’s normaloperating cycle of 2 to 3 years.
Cost associated with the acquisition of land includes the purchase price of the land, professional fees, stamp duties, commissions,conversion fees, other direct development expenditure and related overheads.
g) Property development costs
Property development costs comprise costs associated with the acquisition of land and all costs that are directly attributable todevelopment activities or that can be allocated on a reasonable basis to such activities.
Property development costs not recognised as an expense is recognised as an asset and is stated at the lower of cost and netrealisable value.
The excess of revenue recognised in the income statement over billings to purchasers is shown as accrued billings underreceivables, deposits and prepayments (Note 14) and the excess of billings to purchasers over revenue recognised in the incomestatement is shown as progress billings under payables and accruals (Note 19).
h) Inventories
(i) Developed properties held for sale
Completed properties held for sale are stated at the lower of cost and net realisable value. Cost consists of costs associatedwith the acquisition of land, direct costs and appropriate proportions of common costs attributable to developing theproperties to completion.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completionand selling expenses.
(ii) Other inventories
Raw materials, consumables, manufactured inventories and trading inventories are stated at the lower of cost and netrealisable value with weighted average cost being the basis of cost.
The cost of inventories includes expenditures incurred in acquiring the inventories and bringing them to their existing locationand condition. In the case of manufactured inventories, cost includes an appropriate share of production overheads basedon normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completionand selling expenses.
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i) Receivables
Receivables are initially recognised at their cost when the contractual right to receive cash or other financial asset fromanother entity is established.
Subsequent to initial recognition, receivables are stated at cost less allowance for doubtful debts.
Receivables are not held for the purpose of trading.
j) Construction work-in-progress
Construction work-in-progress represents the gross unbilled amount expected to be collected from customers for contract workperformed to date. It is measured at cost plus profit recognised to date less progress billing and recognised losses. Cost includesall expenditures related directly to specific projects and an allocation of fixed and variable overheads incurred in the Group’sconstruction activities based on normal operating capacity.
Construction work-in-progress is presented as part of receivables, deposits and prepayments in the balance sheet. If paymentsreceived from customers exceed the income recognised, then the difference is shown in payables and accruals as amount due tocontract customers.
k) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which havean insignificant risk of changes in value. For the purpose of the cash flow statement, cash and cash equivalents are presentednet of bank overdrafts and pledged deposits.
l) Impairment of assets
The carrying amounts of assets except for inventories [refer Note 2 (h)], assets arising from construction contracts [refer Note2 (j)], deferred tax assets [refer Note 2 (s)] and financial assets (excluding investments in subsidiaries, associates and jointventures that are not classified as held for sale or included in a disposal group that is classified as held for sale), are reviewed ateach reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’srecoverable amount is estimated.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount.A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from otherassets and groups. Impairment losses are recognised in the income statement. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce thecarrying amount of the other assets in the unit (groups of units) on a pro rata basis.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell.In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate thatreflects current market assessments of the time value of money and the risks specific to the asset.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periodsare assessed at each reporting date for any indications that the losses have decreased or no longer exist. An impairment loss isreversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversedonly to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, netof depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to theincome statement in the year in which the reversals are recognised.
m) Employee benefits
Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measuredon an undiscounted basis and are expensed as the related service is provided.
A provision is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group hasa present legal or constructive obligation to pay this amount as a result of past service provided by the employees and theobligation can be estimated reliably.
The Group’s contributions to the Employees Provident Fund are charged to the income statements in the year to which theyrelate. Once the contributions have been paid, the Group has no further payment obligations.
financial statementsnotes to the (continued)
n) Share capital
(i) Share issue expenses
Incremental costs directly attributable to issue of shares classified as equity are recognised as a deduction from equity.
(ii) Repurchase of share capital
When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributablecosts, is recognised as a deduction from equity. Repurchased shares that are not subsequently cancelled are classified astreasury shares and are presented as a deduction from total equity.
o) Payables
Payables are measured initially and subsequently at cost. Payables are recognised when there is a contractual obligation todeliver cash or other financial asset to another entity.
p) Hire purchase loans
Property, plant and equipment acquired using hire purchase loans are capitalised and depreciated in accordance with Note 2 (b)(iii). Outstanding hire purchase instalments after deducting interest yet to fall due are disclosed as hire purchase loans in thebalance sheet. Hire purchase interest is charged to the income statement over the loan tenor using the ‘sum-of-digit’ method.
q) Revenue
(i) Construction contracts
As soon as the outcome of a construction contract can be estimated reliably, contract revenue and expenses are recognisedin the income statement in proportion to the stage of completion of the contract. Contract revenue includes the initial amountagreed in the contract plus any variations in contract work, claims and incentive payments to the extent that it is probablethat they will result in revenue and can be measured reliably.
The stage of completion is assessed by reference to the proportion that contract costs incurred for contract work performedto date that reflect work performed bear to the estimated contract costs. When the outcome of a construction contractcannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that are likely tobe recoverable. An expected loss on a contract is recognised immediately in the income statement.
(ii) Property development
Revenue from property development activities is recognised based on the stage of completion of properties sold measuredby reference to the proportion that property development costs incurred for work performed to date bear to the estimatedtotal property development costs.
Where the financial outcome of a property development activity cannot be reliably estimated, property developmentrevenue is recognised only to the extent of property development costs incurred that is probable to be recoverable, andproperty development costs on the development units sold are recognised as an expense in the period in which they areincurred.
Any expected loss on a development project, including costs to be incurred over the defects liability period, is recognisedimmediately in the income statement.
(iii) Dividend income
Dividend income is recognised when the right to receive payment is established.
(iv) Goods sold
Revenue from the sale of goods is measured at fair value of the consideration received or receivable, net of returns andallowances, trade discounts and volume rebates. Revenue is recognised when the significant risks and rewards of ownershiphave been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return ofgoods can be estimated reliably, and there is no continuing management involvement with the goods.
(v) Sand filling and earthwork
Revenue from provision of sand extraction and land filling services is recognised in the income statement based on quantityof sand filled at agreed rates.
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(vi) Hire of equipment
Income derived from hiring of equipment is recognised as it accrues at the contracted rates.
(vii)Rental income
Rental income from investment property is recognised in the income statement on a straight-line basis over the term of thelease.
(vii)Management fees
Management fees are charged by the Company to its subsidiaries based on a percentage of the subsidiaries’ turnover.
r) Interest income and borrowing costs
Interest income is recognised as it accrues, using the effective interest method.
All borrowing costs are recognised in the income statement using the effective interest method, in the period in which they areincurred except to the extent that they are capitalised as being directly attributable to the acquisition, construction or productionof an asset which necessarily takes a substantial period of time to be prepared for its intended use.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is beingincurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or saleare in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary toprepare the qualifying asset for its intended use or sale are interrupted or completed.
s) Tax expense
Tax expense comprises current and deferred tax. Tax expense is recognised in the income statement except to the extent thatit relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enactedat the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amountsof assets and liabilities for reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised forthe following temporary differences: the initial recognition of goodwill; the initial recognition of assets or liabilities in a transactionthat is not a business combination and that affects neither accounting nor taxable profit (or tax loss). Deferred tax is measuredat the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that havebeen enacted or substantively enacted by the balance sheet date.
Deferred tax liability is recognised for all taxable temporary differences.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against whichtemporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced by the extentthat it is no longer probable that the related tax benefit will be realised.
Additional taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the relateddividends is recognised.
t) Earnings per share
The Group presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit orloss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstandingduring the period.
u) Segment reporting
A segment is a distinguishable component of the Group that is engaged either in providing products or services (businesssegment), or in providing products or services within a particular economic environment (geographical segment), which is subjectto risks and rewards that are different from those of other segments.
financial statementsnotes to the (continued)
3.Pr
oper
ty,
plan
t an
d eq
uipm
ent
- G
roup
Out
right
pur
chas
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fact
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and
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At 1
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200
518
,259
1,47
05,
681
2,66
19,
726
3,62
813
,554
781
893
125
56,7
78Ad
ditio
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005
587
1,98
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8-
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2005
/1
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2006
16,7
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10,6
863,
248
11,5
934,
964
13,7
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969
0-
65,6
23Ad
ditio
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511
294
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43,
368
1,81
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298
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n-
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-17
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--
(178
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-
At 3
1 D
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ber
2006
17,1
443,
092
11,6
343,
551
15,1
396,
439
15,2
3593
41,
810
452
75,4
30
Dep
reci
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n
At 1
Jan
uary
200
577
512
754
51,
437
5,53
42,
309
9,33
3-
287
7620
,423
Dep
reci
atio
n fo
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ar30
928
150
379
1,44
158
91,
576
-14
690
4,70
8D
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--
--
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)(4
)-
--
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Rec
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(205
)20
5-
-13
3-
166
-(1
33)
(166
)-
At 3
1 D
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ber
2005
879
360
695
1,81
66,
813
2,89
411
,075
-30
0-
24,8
32
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
103
104
3. P
rope
rty,
pla
nt a
nd e
quip
men
t -
Gro
up (
cont
inue
d) Out
right
pur
chas
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nder
hire
pur
chas
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Shor
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At 1
Jan
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200
687
936
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51,
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6,81
32,
894
11,0
75-
300
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Dep
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397
1,88
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At 3
1 D
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2006
1,18
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22,
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At 1
Jan
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200
517
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136
1,22
44,
192
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94,
221
781
606
4936
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At 3
1 D
ecem
ber
2005
/
1 Ja
nuar
y 20
0615
,870
2,62
09,
991
1,43
24,
780
2,07
02,
709
929
390
-40
,791
At 3
1 D
ecem
ber
2006
15,9
562,
694
10,6
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432
6,07
32,
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2,47
593
41,
493
420
44,1
92
financial statementsnotes to the (continued)
3. Property, plant and equipment – Group (continued)
Restrictions on titles of land
The title to one parcel of short-term leasehold land and the building thereon costing RM811,000 (2005: RM811,000), the titles toanother seven (2005: five) parcels of short-term leasehold land costing RM1,492,000 (2005: RM1,343,000) and the title to one(2005: nil) parcel of long-term leasehold land costing RM2,016,000 (2005: nil) have yet to be issued by the relevant authorities.
Three (2005: Three) parcels of long-term leasehold land costing RM16,747,000 (2005: RM16,747,000) have only been issued withprovisional titles by the relevant authorities.
The titles to four (2005: four) parcels of short-term leasehold land costing RM25,000 (2005: RM25,000) belonging to a subsidiary areregistered in the name of another subsidiary holding them in trust for the former.
In addition, the strata titles to two (2005: two) buildings costing RM359,000 (2005: RM359,000) are in the process of being obtainedfrom the authorities.
Depreciation charge for the year is allocated as follows:
Group2006 2005
RM’000 RM’000
Income statements (Note 20) 4,902 3,788Property development costs (Note 13) 1,006 415Construction work-in-progress (Note 14) 787 505
6,695 4,708
4. Investment property – Group
Office buildingRM’000
CostAt 1 January 2005, 31 December 2005 and 31 December 2006 750
DepreciationAt 1 January 2005 234Depreciation for the year (Note 20) 13
At 31 December 2005 / 1 January 2006 247Depreciation for the year (Note 20) 13
At 31 December 2006 260
Carrying amounts
At 1 January 2005 516
At 31 December 2005 / 1 January 2006 503
At 31 December 2006 490
The indicative market value of the property as at 31 December 2006 is RM800,000 (2005: RM800,000).
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
105
106
financial statementsnotes to the (continued)
5. Investment in subsidiaries - Company
2006 2005RM’000 RM’000
Unquoted shares, at cost 279,962 279,962
The principal activities of the subsidiaries, all of which are incorporated in Malaysia, and the Company’s interest therein are as follows:
Effectiveownershipinterest
Name of subsidiary Principal activities 2006 2005% %
Naim Cendera Property developer and civil 100.0 100.0Sdn. Bhd.(“NCSB”) and building contractor
Subsidiaries of NCSB
Total Reliability Civil and building 51.0 51.0Sdn. Bhd. (“TRSB”) contractor
Desa Ilmu Sdn. Bhd. Property developer 60.0 60.0
Naim Citra Sdn. Bhd. Civil contractor 100.0 100.0
NCSB Engineering Civil and earthwork contractorSdn. Bhd. and hire of machinery 100.0 100.0
TR Smart Piles Manufacture and sale 51.0 51.0Sdn. Bhd. of reinforced concrete piles
TR Bricks Sdn. Bhd. Manufacture and 45.0 * 45.0 *sale of bricks
TR Green Sdn. Bhd. Contractor for 100.0 100.0landscaping services
Naim Cendera Dua Trading of 100.0 100.0Sdn. Bhd. construction materials
Property, plant and equipment (173) (151) (324) (139) (463)Unabsorbed capital allowances - 21 21 - 21Tax loss carry-forwards - 139 139 - 139Allowances 89 - 89 156 245Fair value adjustment on acquisition of subsidiaries (75,947) 14,189 (61,758) 3,392 (58,366)
(76,031) 14,198 (61,833) 3,409 (58,424)
(Note 21) (Note 21)
* This relates to the land held for property development, property development costs as well as property, plant and equipment ofthe subsidiaries acquired in July 2003. This deferred tax liability is reversed to the income statements progressively when the subjectland is developed and/or sold or when the property, plant and equipment are amortised/depreciated, as the case may be.
Movements in temporary differences during the year are as follows:
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
111
112
11. Deferred tax assets and liabilities - Group (continued)
In recognising the deferred tax assets attributable to unutilised tax loss carry-forwards and unabsorbed capital allowance carry-forwards, the Directors made an assumption that there will not be any substantial change (more than 50%) in the shareholders ofthe subsidiaries concerned. Should there be such a substantial change, the unutilised tax loss carry-forwards and unabsorbed capitalallowance carry-forwards included in the computation of the deferred tax assets and liabilities will not be available to the Group,resulting in an increase in net deferred tax liabilities of RM160,000.
Unrecognised deferred tax assetsDeferred tax assets have not been recognised in respect of the following items:
Group2006 2005
RM’000 RM’000
Property, plant and equipment (13) -Unutilised tax loss 175 4Unabsorbed capital allowances 551 141
713 145
The deductible temporary differences do not expire under current tax legislation unless there is a substantial change in shareholders(more than 50%). If there is substantial change in shareholders, unutilised tax loss carry-forwards and unabsorbed capital allowancecarry-forwards will not be available to the Group. Deferred tax assets have not been recognised in respect of the above itemsbecause it is not probable that future taxable profit will be available against which the Group can utilise the benefits therefrom.
12. Inventories
Group2006 2005
RM’000 RM’000
At cost
Developed properties held for sale 10,303 14,324Manufactured inventories 2,455 1,279Raw materials 253 81Consumables 479 445Trading inventories 1,347 522
14,837 16,651
financial statementsnotes to the (continued)
13. Property development costs – Group
Accumulatedcosts charged
Development to incomeLand costs statement Total
RM’000 RM’000 RM’000 RM’000
At 1 January 2005 57,466 222,776 (175,248) 104,994
Transfer from land held for property development (Note 9) 66,411 - - 66,411Costs incurred during the year 2,050 138,822 - 140,872Costs charged to income statement - - (136,400) (136,400)Transfer of completed properties to inventories, net of sales (7,551) (147,156) 146,368 (8,339)
At 31 December 2005 118,376 214,442 (165,280) 167,538
At 1 January 2006 118,376 214,442 (165,280) 167,538
Transfer from land held for property development (Note 9) 6,592 - - 6,592Costs incurred during the year 4,755 160,655 - 165,410Costs charged to income statement - - (145,024) (145,024)Transfer of completed properties to inventories,
net of sales (1,238) (17,330) 15,840 (2,728)
At 31 December 2006 128,485 357,767 (294,464) 191,788
Property development costs incurred during the financial year include:
Group2006 2005
RM’000 RM’000
Depreciation (Note 3) 1,006 415Personnel expenses:- contributions to the Employees Provident Fund 365 287- wages, salaries and others 3,515 2,993Interest expense - 5Hire of equipment - 728Rental of premises 6 15
Interest was capitalised in property development costs at the rate of 6.20% per annum in the previous financial year.
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
Construction work-in-progress (see below) 53,447 13,204 - -
Accrued billings 11,869 10,993 - -Deposits 5,883 1,698 - -Prepayments 8 86 - -Other receivables 1,556 1,213 36 42Amount due from associates 1,870 8 - -Amount due from joint ventures 9,099 3,882 - -
258,862 197,673 36 42
Included in trade receivables of the Group is an amount of RM67,270,000 (2005: RM84,088,000) due from Syarikat Perumahan NegaraBerhad (“SPNB”) [which is wholly owned by the Minister of Finance (Incorporated)] for sales of vacant land in December 2005. Anadditional payment of RM25,226,000 was received from SPNB in February 2007 and the money is currently held by a legal solicitor untilthe issuance of Form L by the relevant land registry. Titles to the land will only be transferred to SPNB upon the full settlement of thepurchase consideration.
Included in amount due from joint ventures is an amount of RM8,396,000 (2005: Nil) which is trade in nature. The remaining balanceis non-trade in nature, unsecured and interest free.
Amount due from associates includes an amount of RM1,693,000 (2005:Nil) which is trade in nature. The remaining balance is non-tradein nature, unsecured and interest free.
financial statementsnotes to the (continued)
14. Receivables, deposits and prepayments (continued)
Construction work-in-progress
Group2006 2005
RM’000 RM’000
Aggregate costs incurred to date 395,730 100,708Attributable profits 84,135 25,471
31,048 460Amount due to contract customers reclassified to payables and accruals (Note 19) 22,399 12,744
53,447 13,204
Additions to aggregate costs incurred during the year include:
Group2006 2005
RM’000 RM’000
Depreciation (Note 3) 787 505Personnel expenses:- contributions to the Employees Provident Fund 453 508- wages, salaries and others 6,562 4,851Hire of equipment 405 522Rental of premises 1,972 101
Included in progress billings receivables of the Group are retention sums of RM1,765,000 (2005: RM4,067,000) relating to constructionwork-in-progress.
Retentions are unsecured, interest free and are expected to be collected as follows:
Group2006 2005
RM’000 RM’000
Within 1 year 310 2,4381 – 2 years 580 3102 – 3 years 310 5123 – 4 years 565 3104 – 5 years - 497
1,765 4,067
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
115
116
15. Amounts due from/to subsidiaries - Company
Included in amount due from subsidiaries is an amount of RM11,742,000 (2005: RM17,574,000) which is non-trade in nature,unsecured and interest free. The remaining balance is trade in nature.
The amounts due to subsidiaries are non-trade in nature, unsecured and interest free.
16. Cash and cash equivalents
Group Company2006 2005 2006 2005
RM’000 RM’000 RM’000 RM’000
Fixed deposits placed with licensed banks 47,255 69,710 10,122 9,102Short term cash funds 45,000 13,000 17,500 13,000Cash and bank balances 29,754 51,218 1,163 2,541
122,009 133,928 28,785 24,643
Fixed deposits of the Group amounting to RM1,652,000 (2005: RM2,111,000) are pledged to banks to secure bank guaranteefacilities granted to a subsidiary (2005: three subsidiaries).
17. Capital and reserves
Share capital
Group and CompanyAmount Number of shares
2006 2005 2006 2005RM’000 RM’000 RM’000 RM’000
Ordinary shares of RM1.00 each
AuthorisedAt 1 January and 31 December 500,000 500,000 500,000 500,000
Issued and fully paidAt 1 January and 31 December 250,000 250,000 250,000 250,000
Capital reserve
This consists of the Group’s share of bonus issued by a subsidiary.
financial statementsnotes to the (continued)
17. Capital and reserves (continued)
Treasury shares
The shareholders of the Company, via an ordinary resolution passed in the annual general meeting held on 15 June 2006, approvedthe Company’s plan to purchase its own shares. The Directors of the Company are committed to enhancing the value of the Companyto its shareholders and believe that the repurchase plan can be applied in the best interests of the Company and its shareholders.
During the year, the Company repurchased 237,000 (2005: 3,772,000) of its issued shares from the open market. The average pricepaid for the shares repurchased was RM2.97 (2005: RM2.92) per ordinary share. The repurchase transactions were financed byinternally generated funds. The repurchased shares were retained as treasury shares. Treasury shares have no rights to voting,dividends and participation in other distributions.
Section 108 tax credit
Subject to agreement by the Inland Revenue Board, the Company has sufficient Section 108 tax credit to distribute all of its retainedprofits at 31 December 2006 as dividends.
18. Hire purchase loans
Group2006 2005
RM’000 RM’000
Non-current 1,124 51Current 557 184
Total 1,681 235
The hire purchase loans bear interest at 2.60% to 4.75% (2005: 3.30% to 4.75%) flat per annum and are payable as follows:
Included in trade payables of the Group are retention sums and performance bonds amounting to RM16,296,000 (2005: RM13,396,000).
Included in accruals is an amount of RM1,656,453 (2005: Nil) accrued for state land alienated to a subsidiary.
Other payables of the Group includes an amount owing to a minority shareholder of a subsidiary of RM144,000 (2005: RM470,000)for the acquisition of land.
Included in amount due to associates is an amount of RM3,822,000 (2005: RM183,000) which is trade in nature. The remainingbalance is non-trade in nature, unsecured and interest free.
20. Revenue and operating profit
Group Company2006 2005 2006 2005
RM’000 RM’000 RM’000 RM’000
Revenue- sale of development properties and vacant land 213,977 307,647 - -- contract revenue 271,004 95,789 - -- sale of goods 40,045 19,655 - -- sand filling and earthwork 2 3 - -- landscaping and turfing 2 - - -- management fees - - 2,110 2,175- hire of equipment 967 - - -- interest income - - 276 714- dividend income from subsidiaries - - 49,600 35,200- realised interest/profit earned on short-term funds - - 425 248
525,997 423,094 52,411 38,337
financial statementsnotes to the (continued)
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
119
20. Revenue and operating profit (continued)
Group Company2006 2005 2006 2005
RM’000 RM’000 RM’000 RM’000
Cost of sales- cost of development properties and vacant land sold 144,546 191,771 - -- contract costs recognised as an expense 219,984 77,184 - -- cost of goods sold 40,136 18,571 - -
404,666 287,526 - -
Operating profit is arrived at after crediting:
Dividend income from:- quoted shares in Malaysia 127 40 - -- unit trusts 8 17 - -Gain on disposal of property, plant and equipment - 13 - -Gain on disposal of a subsidiary (Note 28) - 2 - -Interest received from:- fixed deposits 2,371 1,913 - -- overdue trade balances 27 37 - -Rental income from property lease 307 116 - -Reversal of allowance for doubtful debts 2,539 2,717 - -Reversal of property development costs
previously written off 1,302 - - -
and after charging:
Amortisation of intangible asset (Note 8) 703 - - -Audit fee 198 162 15 12Bad debts written off 2 - - -Depreciation of property, plant and equipment (Note 3) 4,902 3,788 - -Depreciation of investment property (Note 4) 13 13 - -Goodwill written off (Note 28) 5 - - -Interest expense on:- bankers’ acceptances 3 - - -- hire purchase loans 71 19 - -- other loans - 26 - -- overdrafts - 2 -- overdue trade balances 43 36 - -Inventories written off 26 37 -Loss on disposal of property plant and equipment 68 - - -Personnel expenses (including key management personnel):- contributions to the Employees Provident Fund- Directors 526 351 - -- employees 1,290 1,931 217 201
1,816 2,282 217 201- wages, salaries and others 19,223 18,477 1,679 2,167- Directors’ fees 688 354 676 342- Directors’ other emoluments 3,031 3,289 4 98- Directors’ estimated monetary value of benefits-in-kind 141 96 - -Rental of equipment 78 41 - -Rental of premises 400 302 - -
120
21. Tax expense
Recognised in the income statement
Group Company2006 2005 2006 2005
RM’000 RM’000 RM’000 RM’000
Current tax expenseMalaysian- current year 33,113 48,187 14,000 9,920- prior year (284) 164 55 (80)
32,829 48,351 14,055 9,840
Deferred tax expense (Note 11)Malaysian- current year (3,324) (14,211) - -- prior year ( 85) 13 - -
(3,409) (14,198) - -
Total tax exopense 29,420 34,153 14,055 9,840
Reconciliation of effective tax expense
Group Company2006 2005 2006 2005
RM’000 RM’000 RM’000 RM’000
Profit for the year 75,429 88,975 35,300 24,730Total tax expense 29,420 34,153 14,055 9,840
Profit excluding tax 104,849 123,128 49,355 34,570Share of tax of equity accounted associates 296 185 - -Share of tax of joint ventures 1,467 500 - -
31,552 34,661 14,000 9,920(Over)/Under provisions in prior years (369) 177 55 (80)
Tax expense recognised in the income statement 31,183 34,838 14,055 9,840Share of tax of equity accounted associates
and joint ventures (1,763) (685) - -
Total tax expense 29,420 34,153 14,055 9,840
^ With effect from year of assessment 2004, companies with paid-up capital of RM2.5 million and below at the beginning of thebasis period for a year of assessment are subject to corporate tax at 20% on chargeable income up to RM500,000.
* With effect from year of assessment 2007, the corporate tax rate is 27%. The Malaysian Budget 2007 also announced thereduction of corporate tax rate to 26% in 2008. The Group provided deferred tax liabilities at 27%.
22. Basic earnings per ordinary share – Group
The calculation of basic earnings per ordinary share at 31 December 2006 was based on the profit attributable to ordinary shareholdersof RM66,229,000 (2005: RM79,145,000) and a weighted average number of ordinary shares outstanding during the year of244,491,000 (2005: 247,035,000).
Weighted average number of ordinary shares
2006 2005’000 ’000
Issued ordinary shares, net of share bought back at 1 January 244,728 248,500Effect of ordinary shares repurchased in:January (236) -February - (1,068)May - (1)June (1) -October - (121)November - (196)December - (79)
Weighted average number of ordinary shares at 31 December 244,491 247,035
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
121
122
23. Dividends
Dividends recognised in the current year by the Company are:
Sen per Totalshare amount Date of
(net of tax) RM’000 payment
2006
Interim 2006 ordinary 10.80 26,405 5 June 2006Second interim 2005 ordinary 3.60 8,802 8 March 2006
Total amount 35,207
2005
First interim 2005 ordinary 5.04 12,466 10 October 2005Final 2004 ordinary 5.04 12,465 17 June 2005
Total amount 24,931
24. Segmental informationSegment information is presented in respect of the Group’s business segments. The primary format, business segments, is based onthe Group’s management and internal reporting structure. Inter-segment pricing is determined on an arm’s length basis.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on areasonable basis. Unallocated items mainly comprise investment income, interest expense, share of profit after tax of equityaccounted associates and joint ventures, realisation of negative goodwill and corporate taxes.
Segment capital expenditure is the total cost incurred during the year to acquire property, plant and equipment and intangible assetother than goodwill.
Business segments
The Group comprises the following three main business segments:
Property development - Development of residential and commercial properties.
Construction - Construction of buildings, roads and bridges.
Others - Manufacture and sale of construction materials, provision of sand filling/earthworks services,trading activities and property investment holdings.
All the business segments are operated solely in Malaysia, and as such, segmental reporting by geographical locations is notpresented.
financial statementsnotes to the (continued)
24.
Segm
enta
l inf
orm
atio
n (c
ontin
ued)
Prop
erty
dev
elop
men
tCo
nstr
uctio
nO
ther
sEl
imin
atio
nCo
nsol
idat
ed20
0620
0520
0620
0520
0620
0520
0620
0520
0620
05R
M’0
00R
M’0
00R
M’0
00R
M’0
00R
M’0
00R
M’0
00R
M’0
00R
M’0
00R
M’0
00R
M’0
00
Tota
l ex
tern
al r
even
ue21
3,97
730
7,64
727
1,00
495
,789
41,0
1619
,658
--
525,
997
423,
094
Inte
r se
gmen
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venu
e2,
164
--
516
14,4
335,
938
(16,
597)
(6,4
54)
--
Tota
l se
gmen
t re
venu
e21
6,14
130
7,64
727
1,00
496
,305
55,4
4925
,596
(16,
597)
(6,4
54)
525,
997
423,
094
Segm
ent
resu
lt62
,367
101,
836
33,1
6012
,327
4,50
854
8(1
,600
)(6
71)
98,4
3511
4,04
0
Una
lloca
ted
expe
nses
(580
)(7
58)
Res
ults
fro
m o
pera
ting
activ
ities
97,8
5511
3,28
2In
vest
men
t in
com
e2,
507
1,97
0N
egat
ive
good
will
rec
ogni
sed
-6,
268
Inte
rest
exp
ense
(117
)(8
3)Sh
are
of p
rofit
aft
er t
ax o
f eq
uity
acc
ount
ed a
ssoc
iate
s an
d jo
int
vent
ures
4,60
41,
691
Tax
expe
nse
(29,
420)
(34,
153)
Prof
it fo
r th
e ye
ar75
,429
88,9
75
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
123
124
24.
Segm
enta
l inf
orm
atio
n (c
ontin
ued
Prop
erty
dev
elop
men
tCo
nstr
uctio
nO
ther
sCo
nsol
idat
ion
2006
2005
2006
2005
2006
2005
2006
2005
RM
’000
RM
’000
RM
’000
RM
’000
RM
’000
RM
’000
RM
’000
RM
’000
Segm
ent
asse
ts46
9,74
054
7,44
625
6,58
511
1,56
855
,435
44,7
6778
1,76
070
3,78
1In
vest
men
t in
ass
ocia
tes
--
1,28
0-
2,71
42,
183
3,99
42,
183
Inve
stm
ent
in j
oint
ven
ture
s-
-7,
638
3,86
5-
-7,
638
3,86
5
469,
740
547,
446
265,
503
115,
433
58,1
4946
,950
793,
392
709,
829
Oth
er i
nves
tmen
ts44
944
1U
nallo
cate
d as
sets
-7
Tota
l as
sets
793,
841
710,
277
Segm
ent l
iabi
litie
s13
5,38
516
0,11
199
,307
40,8
5129
,443
13,3
8826
4,13
521
4,35
0
Una
lloca
ted
liabi
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s-
23
Tota
l lia
bilit
ies
264,
135
214,
373
Capi
tal
expe
nditu
re3,
145
2,69
85,
648
1,25
91,
473
5,22
510
,266
9,18
2
Dep
reci
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n an
d
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of
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ets
2,29
23,
012
4,00
71,
390
409
319
6,70
84,
721
Amor
tisat
ion
of
inta
ngib
le a
sset
--
703
--
-70
3-
Ther
e ar
e no
sig
nific
ant
non-
cash
exp
ense
s ot
her
than
dep
reci
atio
n an
d am
ortis
atio
n.
25. Financial instruments
The Board of Directors undertakes on-going reviews to identify, assess and manage key financial risks to which Group activities areexposed.
Credit risk
Most of the construction projects undertaken by the Group are government funded. Prior to tendering for construction contracts,credit evaluation on potential customers is carried out. The management regularly reviews the credit risks of customers and takesappropriate measures to enhance credit control procedures. The Group’s exposure to credit risk for property development is low astitles to properties are only transferred to purchasers upon full settlement of purchase consideration.
Cash and cash equivalents are only placed with licensed banks and finance companies.
At balance sheet date, other than an amount of RM67,270,000 receivable from SPNB constituting 25% of the outstanding receivables,deposits and prepayments of RM258,862,000, there are no significant concentrations of credit risk. The maximum exposure to creditrisk for the Group and the Company is represented by the carrying amount of each financial asset in the balance sheet.
Foreign currency risk
The Group is not exposed to foreign currency risk as all its transactions are denominated in Ringgit Malaysia.
Liquidity risk
The Group constantly manages its cash flow to ensure availability of funds to meet its working capital requirements by maintaining asufficient level of banking facilities and cash and cash equivalents.
Interest rate risk
The Group finances its daily operations through a mixture of internally generated funds and bank borrowings, the latter being in theform of hire purchase loans, the interest rate for which is fixed throughout the loan tenor. The investment in interest-bearing assetsis mainly short-term in nature and they are not held for speculative purposes but have been mostly placed as term deposits and cashfunds. In the current operating environment, the risk of interest rates fluctuating adversely is regarded as low.
Effective interest rates and repricing analysis
In respect of interest-earning financial assets, the following table indicates their effective interest rates at the balance sheet dateand the periods in which they reprice or mature, whichever is earlier.
2006 2005Effective Effective
interest rate Less than interest rate Less thanper annum Total 1 year per annum Total 1 year
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
125
financial statementsnotes to the (continued)
126
Fair values
Recognised financial instruments
The carrying amounts of cash and cash equivalents, receivables, deposits and prepayments, and payables and accruals approximatefair values due to the relatively short term nature of these financial instruments.
The Company provides financial guarantees of RM302 million (2005: RM195 million) to banks for credit facilities extended to certainsubsidiaries. The fair value of such financial guarantees is not expected to be material as the probability of the subsidiaries defaultingon the credit lines is remote.
The fair values of the non-current financial assets, together with the carrying amounts shown in the balance sheets, are as follows:
2006 2005Carrying Fair Carrying Fairamount value amount value
Group RM’000 RM’000 RM’000 RM’000
Financial assets
Other investments (Note 10)Quoted shares in Malaysia 325 592 325 455Unit trusts 124 243 116 185
449 835 441 640
The fair value of quoted shares and unit trusts is based on quoted market prices at the balance sheet date without anydeduction for transaction costs.
Unrecognised financial instruments
There were no unrecognised financial instruments as at 31 December 2006 and 31 December 2005.
26. Capital expenditure commitments
Group Company2006 2005 2006 2005
RM’000 RM’000 RM’000 RM’000
Property, plant and equipment
Authorised but not contracted for andexpected to be payable within one year 10,668 6,161 2,015 -
27. Related parties
Identity of related parties
For the purposes of the financial statements, parties are considered to be related to the Group if the Group has the ability, directlyor indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or viceversa, or where the Group and the party are subject to common control or common significant influence. Related parties may beindividuals or other entities.
financial statementsnotes to the (continued)
27. Related parties (continued)
The Group has a related party relationship with:(i) its subsidiaries;(ii) its associates;(iii) its joint ventures;(iv) companies connected to major shareholders of the Company or certain Directors of the Company or of its subsidiaries; and(v) the Directors of the Company and its subsidiaries:
Significant related party transactions other than those disclosed elsewhere in the financial statements are as follows:
Transactions with subsidiaries
Company2006 2005
RM’000 RM’000
Dividend income (49,600) (35,200)Management fees income (2,110) (2,175)
Transactions with associates
Group2006 2005
RM’000 RM’000
TR Concrete Sdn. Bhd.
Purchase of raw materials and other items 1,726 6,561Sales of construction materials (4,967) (1)
SinohydroNaim Sdn Bhd
Construction costs incurred 13,902 -Sales of construction materials (273) -Management Fee income (1) -Rental of machinery (1,446) -
Transaction with an unincorporated joint venture, Syarikat Usahasama Naim Cendera Sdn. Bhd.- RSB Management Services Sdn. Bhd.
Group2006 2005
RM’000 RM’000
Construction contract revenue (45,809) -
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
127
128
Transactions with companies connected to major shareholders/Directors of the Company
Group2006 2005
RM’000 RM’000
Datuk Abdul Hamed Bin Haji Sepawi andDatuk Hasmin Bin Hasnan
Custodev Dua Sdn. Bhd.Acquisition of property, plant and equipment - 4,569Rental of premises 22 -
Eastern Times News Sdn. Bhd.Advertisement charges 20 -
Ir. Suyanto Bin Osman
Town Builder Realty Sdn. Bhd.Construction costs payable 3,088 -Sales of properties (558) -Sales of construction materials (865) -
Datuk Abdul Hamed Bin Haji Sepawi
Tanarak Sdn. Bhd.Supply of information technology services 834 1,056Supply of training equipment 7,568 -Sales of properties (532) -
Donation to Tabung Amanah Naim, of which DatukAbdul Hamed Bin Haji Sepawi is the Chairman 1,000 500
Transactions with Directors of subsidiaries and with companies connected to them
Group2006 2005
RM’000 RM’000
William Wei How Sieng, Director of certain subsidiaries
Companies connected to William Wei How SiengHWS Properties Sdn. Bhd.
Rental of premises 26 27
Primehold Point Sdn. Bhd.Watchman and cleaning services 19 71Sales of properties - (69)
financial statementsnotes to the (continued)
Transactions with Directors of subsidiaries and with companies connected to them (continued)
Group2006 2005
RM’000 RM’000
Company connected Liew Lian Fa and Boon Kuat KhinDirectors of a subsidiary
Smartpiles Sdn. Bhd.Purchase of construction materials 1,233 399
Amount due from/to related parties
Amount due therefrom 1,461 -Amount due thereto (8,329) (34)
The amounts due from/to the subsidiaries, associates and joint ventures are disclosed in the balance sheet as well as Notes 14, 15and 19 to the financial statements.
All transactions with the related parties are priced on an arm’s length basis and none of the outstanding balances is secured.
28. Acquisitions and disposals of subsidiariesOn 27 January 2006, Naim Cendera Sdn. Bhd. (“NCSB”) acquired additional 145,000 shares in, representing 29% of the equity of,Naim Ready Mix Sdn. Bhd. (“NRMSB”) from a minority shareholder for a consideration of RM145,000. At the same time, a subsidiaryof NCSB disposed of its entire 20% equity interest, comprising 100,000 shares, in NRMSB to a third party, for a cash considerationof RM100,000. The resultant group equity interest in NRMSB increased from 61.2% to 80.0%.
On 7 April 2006, NCSB acquired the entire equity interest in SinohydroNaim Sdn. Bhd. (“SSB”) for a consideration of RM2.00. On 10April 2006, the issued and paid-up share capital of SSB was increased to RM2,000,000 and its shareholdings were restructured suchthat the company is now 51% owned by Sinohydro Corporation (M) Sdn. Bhd. and 49% by NCSB.
In the previous year, NCSB acquired the entire equity interest in Naim Equipment Sdn. Bhd. (“NESB”) and Yakin Pelita Sdn. Bhd.(“YPSB”) on 11 May 2005 and Naim Incorporated Berhad (“NIB”) on 30 November 2005, each for a consideration of RM2.00, satisfiedby cash.
On 9 December 2005, NCSB disposed of 51% of the equity interest in Syarikat Usahasama Naim-RSB Sdn. Bhd. (“SUNR”), for a cashconsideration of RM160. SUNR thereupon became an associate of NCSB. The gain arising from the disposal to the Group wasRM2,000.
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
129
130
28. Acquisitions and disposals of subsidiaries (continued)
The acquisitions had the following effect on the Group’s assets and liabilities on the acquisition date:
a) Acquisition of minority interest in an existing subsidiary, NRMSB
2006RM’000
Net assets acquired 40Goodwill on consolidation 5
Cash outflow on acquisition 45
The Group’s share of the net loss in NRMSB for the period subsequent to the acquisition of the additional 18.8% equity staketherein up to 31 December 2006 is approximately RM137,000. The Group also recognised a decrease in minority interest ofRM40,000.
The goodwill of RM5,000 arising from the acquisition of the minority interest, not identifiable to any cash-generating unit, iswritten off to the income statement (Note 20).
b) Acquisitions of NESB, YPSB and NIB
2005RM’000
Current liabilities (28)Goodwill on consolidation 28
Consideration paid, satisfied in cash *Cash acquired *
Net cash inflow -
* Representing cash in hand of RM6
The Group’s share of the net loss in NESB, YPSB and NIB for the period subsequent to the acquisitions up to 31 December 2005was RM73,000. The acquisitions also contributed to a decrease of RM73,000 in Group net assets as at 31 December 2005.
29. Subsequent events
Acquisition of new subsidiaries
On 5 April 2007, NCSB acquired the entire equity interests in Peranan Pakatan Sdn. Bhd., Simbol Warisan Sdn. Bhd., Jelas KemuncakResources Sdn. Bhd., Peranan Makmur Sdn. Bhd., Warisan Makna Sdn. Bhd., Peranan Prima Sdn. Bhd. and Teroka Juta Sdn. Bhd.,each for a consideration of RM2.00, satisfied by cash. These new subsidiaries are presently dormant.
financial statementsnotes to the (continued)
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
131
30. Material litigation
Suit over land
In March 2005, Naim Cendera Tujuh Sdn. Bhd. (“NC7”), a wholly owned subsidiary, received a Writ of Summons from 5 persons suingon behalf of themselves and 79 others, claiming to have native customary rights over part of NC7’s leasehold land known as Lot 23,Block 34, Kemena Land District, Bintulu. Approximately 100 acres out of a total of 1,000 acres of the land are claimed by the plantiffs.
The said land was previously alienated by the Government of Sarawak and due land premium had been settled in prior years. Shouldthe matter not be satisfactorily resolved or should the court rule in favour of the plantiffs, NC7 will approach the State authorities forsubstitution of the land. The suit therefore does not have any material impact to the Group.
31. Change in accounting policyThe adoption of the new and revised FRSs in 2006, particularly FRS 3, Business Combinations, FRS 136, Impairment of Assets andFRS 138, Intangible Assets, has resulted in a change in the accounting policy for goodwill. The change in accounting policy is madein accordance with the transitional provisions of the respective FRSs.
As stated in Note 2(d)(i), Goodwill is stated at cost less accumulated impairment losses and is no longer amortised. Instead, goodwillimpairment is tested annually, or when circumstances change, indicating that goodwill might be impaired. Negative goodwill isrecognised immediately in the income statement (as opposed to being recognised in income statements over five years previously).This has resulted in the derecognition of negative goodwill and an increase in the retained profits of the Group as at 1 January 2006by RM16,224,000.
Had there not been a change in accounting policy, the net profit attributable to shareholders of the financial year would increase byRM6,268,000 and earnings per share would increase from 27.1 sen to 29.7 sen.
32. Comparative figuresCertain comparative figures have been reclassified to conform with the current year’s presentation as well as the presentationrequirements of FRS 101, Presentation of Financial Statements.
Following the adoption of FRS 3, Business Combinations, minority interest was reclassified into equity; likewise in arriving at profit forthe year, minority interest was not deducted.
The carrying amounts of the material items affected by the reclassification as at 31 December 2005 before and after the reclassificationare as follows:
Group CompanyAs As
As previously As previouslyrestated stated restated statedRM’000 RM’000 RM’000 RM’000
Income statements and Note 24, Segmental information
Share of profit after tax of equity accounted associatesand joint ventures 1,691 2,376 - -
Tax expense 34,153 34,838 - -
analysis of shareholdings
132
Authorised Share Capital : RM500,000,000 comprising 500,000,000 shares of RM1.00 eachIssued and Paid-up Share Capital : RM250,000,000 comprising 250,000,000 shares of RM1.00 eachClass of Shares : Ordinary Shares of RM1.00 eachVoting rights : 1 vote per ordinary share
Size of Shareholding No of Shares % over Total No of % Over TotalShares Holders Shareholders
No. Name of Shareholder No. of Shares Held % of shareholding
1 Island Harvests Sdn. Bhd. 31,769,700 12.70792 Hasmi Bin Hasnan 28,918,850 11.56753 Lembaga Tabung Haji 19,075,600 7.63024 Bumiputra-Commerce Nominees (Tempatan) Sdn. Bhd. 14,000,000 5.6000
for Tapak Beringin Sdn. Bhd.5 Lembah Rakyat Sdn. Bhd. 12,500,800 5.00036 Lambaian Kukuh Sdn. Bhd. 10,650,150 4.26017 Lembah Rakyat Sdn. Bhd. 10,000,000 4.00008 Hasmi & Associates Management Sdn. Bhd. 9,672,750 3.86919 HSBC Nominees (Asing) Sdn. Bhd. 7,905,200 3.1621
for JPMorgan Chase Bank, National Association (U.S.A.)10 Employees Provident Fund Board 7,620,100 3.048011 Abdul Hamed Bin Sepawi 7,150,000 2.860012 Cartabatan Nominees (Asing) Sdn. Bhd. 6,000,000 2.4000
SSBT Fund HG22 for Smallcap World Fund, Inc.13 HSBC Nominees (Asing) Sdn. Bhd. 5,400,000 2.1600
for JPMorgan Chase Bank, National Association (U.K.)14 Mayban Nominees (Tempatan) Sdn. Bhd. 5,000,000 2.0000
for Abdul Hamed Bin Sepawi15 HWS Properties Sdn. Bhd. 4,782,250 1.912916 Naim Cendera Holdings Berhad (Share Buy Back Account) 4,369,800 1.747917 Citigroup Nominees (Asing) Sdn. Bhd. 4,250,000 1.7000
for AIG International Funds-Acorns of Asia Balanced Fund18 HSBC Nominees (Tempatan) Sdn. Bhd. 3,759,900 1.5040
28 Cartaban Nominees (Asing) Sdn. Bhd. State Street Luxembourg 1,058,800 0.4235Fund AA30 for Allianz Global Investors Selections RCM Malaysia Fund
29 Citigroup Nominees (Asing) Sdn. Bhd. 1,029,900 0.4120for American International Assurance Company Limited
30 Pelita Dinamik Sdn. Bhd. 1,000,000 0.4000
Substantial Shareholders
Name of Substantial Shareholder Direct IndirectNo. of shares held % No. of shares held %
1 Island Harvests Sdn. Bhd. 31,769,700 12.71 - -2 Datuk Hasmi Bin Hasnan 28,918,850 11.57 52,292,600 20.923 Lembah Rakyat Sdn. Bhd. 22,500,800 9.00 - -4 Tapak Beringin Sdn. Bhd. 14,406,900 5.76 - -5 Datuk Abdul Hamed Bin Sepawi 12,515,100 5.00 37,107,700 14.846 Employees Provident Fund Board 7,620,100 3.04 5,751,100 2.37 Lembaga Tabung Haji 19,075,600 7.63 - -
Directors’ Direct and Indirect Interest in the Company
Direct IndirectNo. of shares held % No. of shares held %
1 Datuk Abdul Hamed Bin Sepawi 12,515,100 5.00 37,107,700 14.842 Datuk Hasmi Bin Hasnan 28,918,850 11.56 52,292,600 20.923 Dr. Sharifuddin Bin Abdul Wahab 100,000 0.04 - -4 Ahmad Bin Abu Bakar - - - -5 Ir. Suyanto Bin Osman 135,000 0.05 - -6 Kueh Hoi Chuang 144,100 0.06 - -7 Abang Hasni Bin Abang Hasnan - - - -8 YB Tuan Haji Hamden Bin Haji Ahmad - - - -9 Ir. Abang Jemat Bin Abang Bujang - - - -10 Datu’ Haji Abdul Rashid Bin Mohd Azis - - - -11 Sylvester Ajah Subah @ Ajah Bin Subah 44,000 0.02 - -
(appointed on 26 February 2007)12 Professor Abang Abdullah Bin Abang Mohamad Alli - - - -
(appointed on 15 May 2007)
list of properties
134
Lot No/ Location Description Date Of Acquisition/ Land Area/ At Cost/Lease Expiring Date (Built up Area) Net Book Value
Sq. Meter RM
PROPERTIES UNDER LANDHELD FOR DEVELOPMENT
Long Term Leasehold
Lot 819, 820, Block 13 Land For 21.08.1997 1,671,411 53,509,307Kuala Baram Land District Miri Development Expiring(Old lot = Lot 772) 20.08.2057
Lot 838, 839 & 640 Block 10 Land For 21.08.1997 692,118 20,522,400Kuala Baram Land District, Miri Development Expiring(Old lot = Lot 800) 20.08.2057
Lot 73, 74, 75 Block 11, Land For 21.08.1997 827,126 6,325,027Kuala Baram Land District, Miri Development Expiring(Old lot = Lot 5156, Block 10) 20.08.2057
Lot 3247 Block 11 Land For 20.07.1995 679,006 34,739,048Kuala Baram Land District, Miri Development Expiring(Old lot = Lot 4281, Block 10) 19.07.2055
Lot 6434, Block 10 Land For 20.07.1995 - -Kuala Baram Land District, Miri Development Expiring
19.07.2055
Lot 172, 173 & 182, Block 10 Land For 21.08.1997 326,229 14,074,394Kuala Baram Land District, Miri Development Expiring(Old lot = Lot 5451, Block 10) 19.07.2055
Lot 3625, Block 14 Land For 22.06.2004 390,171 5,453,498Salak Land District Development Expiring
21.06.2064
Short Term Leasehold
Lot 61, Section 41 Vacant Land 19.10.1998 6,151 1,989,828Kuching Land District, Kuching Expiring
14.10.2052
Sub-total 136,613,502
PROPERTIES UNDER PROPERTYPLANT & EQUIPMENT
Long Term Leasehold
Lots 30 & 31, Block 34 Vacant Land 13.02.2001 4,010,055 13,980,741Kemena Land District, Bintulu Expiring(Old lot = Lot 23, Block 34) 12.02.2060
Lot 431, Block 6 Industrial Land 08.06.1997 10,118 1,187,105Kuala Baram Land District, Miri and Building Expiring
(Age: 9 Years) 19.07.2055
Sublot 180, Lot 1534, Block 6 Vacant Land 17.06.2002 476 61,586Kuala Baram District, Miri Expiring
19.07.2055
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
135
Lot No/ Location Description Date Of Acquisition/ Land Area/ At Cost/Lease Expiring Date (Built up Area) Net Book Value
Sq. Meter RM
Sublot 181, Lot 1535, Block 6 Vacant Land 17.06.2002 476 61,586Kuala Baram District, Miri Expiring` 19.07.2055
Sublot 134, Lot 1488, Block 6 Vacant Land 17.03.2006 476 32,906Kuala Baram District, Miri Expiring
19.07.2094
Sublot 135, Lot 1489, Block 6 Vacant Land 17.03.2006 476 32,905Kuala Baram District, Miri Expiring
19.07.2094
Building
Sublot 182, Lot 1539, Block 6 Land and 12.03.2001 493 231,419Kuala Baram District, Miri Buildings Expiring (137)
(Age: 6 Years) 19.07.2055
Sublot 183, Lot 1537, Block 6 Land and 12.03.2001 509 249,613Kuala Baram District, Miri Buildings Expiring (136)
(Age: 6 Years) 19.07.2055
Lot 3162, Block 10 Vacant Land 24.07.2002 12,351 1,065,239Kuching Central Land District, Kuching Expiring
20.08.2062
Lot 3161, Block 10 Vacant Land 24.07.2002 7,140 538,830Kuching Central Land District, Kuching Expiring
20.08.2062
SubLot 104, Lot 1647 Casting Yard 13.09.2006 4,999 193,809PermyJaya Technology Park ExpiringKuala Baram District, Miri 31.07.2094
SubLot 105, Lot 1648 Casting Yard 13.09.2006 4,952 193,657PermyJaya Technology Park ExpiringKuala Baram District, Miri 31.07.2094
Lot 2679, Block 10 Office Building 31.07.2000 (568) 1,808,981Wisma Naim, Jalan Rock (Age: 11 Years) ExpiringKuching Town Land District, Kuching 11.04.2055
Sublot 5747, Lot 4279, Block 10 Tulip Showhouse 15.08.2000 500 199,194Kuala Baram Land District, Miri (Age: 8 Years) Expiring (181)
19.07.2055
Sublot 5748, Lot 4279, Block 10 Rose Showhouse 15.08.2000 500 107,015Kuala Baram Land District, Miri (Age: 8 years) Expiring (90)
19.07.2055
Sublot 5637, Lot 4279, Block 10 Daisy Showhouse 15.08.2000 680 124,146Kuala Baram Land District, Miri (Age: 8 years) Expiring (112)
19.07.2055
136
Lot No/ Location Description Date Of Acquisition/ Land Area/ At Cost/Lease Expiring Date (Built up Area) Net Book Value
Sq. Meter RM
Sublot 6024, Lot 4279, Block 10 Lily Showhouse 15.08.2000 525 98,535Kuala Baram Land District, Miri (Age: 8 years) Expiring (90)
19.07.2055
Sublot 4290, Lot 4279, Block 10 Melati Showhouse 31.08.2000 350 82,629Kuala Baram Land District, Miri (Age: 10 years) Expiring (75)
28.06.2055
Sublot 4291, Lot 4279, Block 10 Melati Showhouse 31.08.2000 350 82,629Kuala Baram Land District, Miri (Age: 10 years) Expiring (75)
28.06.2055
Sublot 4292, Lot 4279, Block 10 Jasmine Showhouse 31.08.2000 350 103,269Kuala Baram Land District, Miri (Age: 10 years) Expiring (84)
28.06.2055
Sublot 4293, Lot 4279, Block 10 Jasmine Showhouse 31.08.2000 350 103,269Kuala Baram Land District, Miri (Age: 10 years) Expiring (84)
28.06.2055
Sublot 1269, Lot 5905, Block 10 Desa Pujut Shophouse 01.01.2006 160 130,666Kuala Baram Land District, Miri (Age: 6 years) Expiring (160)
19.07.2055
Sublot 1270, Lot 5906, Block 10 Desa Pujut Shophouse 01.01.2006 108 130,666Kuala Baram Land District, Miri (Age: 6 years) Expiring (108)
`19.07.2055
Sublot 1271, Lot 5907, Block 10 Desa Pujut Shophouse 01.01.2006 108 130,666Kuala Baram Land District, Miri (Age: 6 years) Expiring (108)
19.07.2055
Sublot 1272, Lot 5908, Block 10 Desa Pujut Shophouse 01.01.2006 108 130,666Kuala Baram Land District, Miri (Age: 6 years) Expiring (108)
19.07.2055
Sublot 1273, Lot 5909, Block 10 Desa Pujut Shophouse 01.01.2006 108 130,666Kuala Baram Land District, Miri (Age: 6 years) Expiring (108)
19.07.2055
Sublot 1274, Lot 5909, Block 10 Desa Pujut Shophouse 01.01.2006 108 130,666Kuala Baram Land District, Miri (Age: 6 years) Expiring (108)
19.07.2055
Sublot 1275, Lot 5909, Block 10 Desa Pujut Shophouse 01.01.2006 108 130,666Kuala Baram Land District, Miri (Age: 6 years) Expiring (108)
19.07.2055
Sublot 4575, Lot 4286, Block 10 Showhouse 31.08.2000 350 62,771Miri Town Land District, Miri (Age: 10 years) Expiring (110)
28.06.2055
Sublot 4576, Lot 4286, Block 10 Showhouse 31.08.2000 350 62,771Miri Town Land District, Miri (Age: 9 years) Expiring (69)
28.06.2055
list of properties
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
137
Lot No/ Location Description Date Of Acquisition/ Land Area/ At Cost/Lease Expiring Date (Built up Area) Net Book Value
Sq. Meter RM
Lot 2631, Block 1 Apartment/ 31.12.2003 (102) 48,457Samarahan Land District, Samarahan Site office Expiring
(Age: 4 years) 30.12.2057
Lot 2631, Block 1 Apartment/ 31.12.2003 (98) 48,457Samarahan Land District, Samarahan Site office Expiring
(Age: 4 years) 30.12.2057
Sublot 1, Lot 676, Block 10 Office Building 12.06.2001 270 732,678Kuching Central Land District (Age: 6 years) Expiring (464)Eastmoore, Kuching 13.08.2063
SHORT TERM LEASEHOLD
Lot 838, Block 10 Land and 17.12.2002 2,060 674,060Kuching Central Land District, Kuching Buildings Expiring (112)
(Age: 48 Years) 16.12.2038
Lot 889, Block 9 Office Building 27.01.1999 185 1,056,666Miri Concession Land District, Miri (Age: 12 Years) Expiring (740)
30.09.2052
Building
TR Smartpile Office Office Building 10,000 7,896 (216)
NOTICE IS HEREBY GIVEN that the 5th Annual General Meeting of Members of NAIM CENDERAHOLDINGS BERHAD will be held at Holiday Inn Resort Damai Beach, Teluk Bandung, Santubong,93756 Kuching, Sarawak on Monday, 18th June 2007 at 11.00 a.m. for the following purposes:
ORDINARY BUSINESS
1. Adoption of Financial StatementsTo receive and adopt the audited financial statements and reports of Directors and Auditorsfor the financial year ended 31st December 2006.
2. Approval of Directors’ FeesTo approve Directors’ Fees in respect of the financial year ended 31st December 2006.
3. Re-Election of DirectorsIn accordance with Article 85 of the Company’s Articles of Association, the following Directorsretire by rotation from the Board and being eligible, offer themselves for re-election.
Datuk Abdul Hamed Bin Haji SepawiDatuk Hasmi Bin HasnanIr. Suyanto Bin Osman
In accordance with Article 92 of the Company’s Articles of Association, the following Directorsretire from the Board and being eligible, offer themselves for re-election.
Mr. Sylvester Ajah Subah @ Ajah Bin SubahProfessor Abang Abdullah Bin Abang Mohamad Alli
4. Re-Appointment of AuditorsTo re-appoint Messrs. KPMG as Auditors and to authorise the Directors to fix theirremuneration.
SPECIAL BUSINESSESTo consider and, if thought fit, to pass the following as Ordinary Resolutions and SpecialResolution:-
5. ORDINARY RESOLUTION 9 - AUTHORITY TO ALLOT AND ISSUE SHARES
“THAT, subject always to the Companies Act 1965, the Articles of Association of the Companyand the approvals of the relevant governmental/regulatory authorities, the Directors be andare hereby empowered pursuant to Section 132D of the Companies Act 1965, to issueshares in the Company from time to time and upon such terms and conditions and for suchpurposes as the Directors may deem fit provided that the aggregate number of shares issuedpursuant to this resolution in any one financial year does not exceed 10% of the issuedcapital of the Company for the time being and THAT the Directors be and are also empoweredto obtain the approval for the listing and quotation for the additional shares so issued on theBursa Malaysia Securities Berhad and THAT such authority shall continue in force until theconclusion of the next Annual General Meeting of the Company.”
annual general meetingnotice of
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
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Ordinary Resolution 10
6. ORDINARY RESOLUTION 10 - PROPOSED RENEWAL OF AUTHORITY TOPURCHASE OWN SHARES
“THAT, subject always to the Companies Act, 1965 and all other applicable laws, guidelines,rules and regulations, the Directors of the Company be and are hereby unconditionallyauthorised to purchase such amount of ordinary shares of RM1.00 each in the Company asmay be determined by the Directors of the Company from time to time through BursaMalaysia Securities Berhad upon such terms and conditions as the Directors may deem fit,necessary and expedient in the interests of the Company provided THAT :-
i) the aggregate number of shares to be purchased and/or held pursuant to this resolutiondoes not exceed ten per centum (10%) of the issued and paid-up ordinary share capitalof the Company;
ii) an amount not exceeding RM30 million being the amount not exceeding the total Company’slatest unaudited net cash resource of RM118 million as at 31st March 2007, be allocatedfor the proposed share buy-back,
iii) the Directors of the Company may decide in their discretion to retain the ordinary sharesin the Company so purchased by the Company as treasury shares and/or to cancel themand/or to resell them and/or to distribute them as share dividends;
AND THAT authority be and is hereby given unconditionally and generally to the Directors ofthe Company to take all such steps as necessary or expedient and/or appropriate in order toimplement, finalise and give full effect to the aforesaid purchase with full powers to assent toany conditions, modifications, revaluations, variations and/or amendments (if any) as maybe imposed by the relevant authorities and with the fullest power to do all such acts andthings thereafter (including without limitation, the cancellation or retention as treasury sharesof all or any part of the purchased shares or to resell the shares or distribute the shares asdividends) in accordance with the Companies Act 1965, the provisions of the Memorandumand Articles of Association of the Company and the requirements and/or guidelines of theBursa Malaysia Securities Berhad and all other relevant governmental and/or regulatoryauthorities.
AND THAT the authority conferred by this resolution will commence immediately and will,subject to renewal thereat, expire at the conclusion of the next Annual General Meeting ofthe Company following the passing of this Ordinary Resolution (unless earlier revoked orvaried by an Ordinary Resolution of the shareholders of the Company in a general meeting)but shall not prejudice the completion of purchase(s) by the Company before that aforesaidexpiry date and in any event, in accordance with the provisions of the guidelines issued byBursa Malaysia Securities Berhad or any other relevant authorities.
140
Special Resolution 1
annual general meetingnotice of
7. SPECIAL RESOLUTION 1 – PROPOSED AMENDMENTS TO THE ARTICLES OFASSOCIATION OF THE COMPANY
“THAT the proposed amendments to the Articles of Association of the Company as containedin Appendix II attached to the Circular to Shareholders dated 24th May 2007 be and arehereby approved AND THAT the Directors of the Company be and are hereby authorized toassent to any modifications, variations and/or amendments as may be required by therelevant authorities and to do all acts and things and take all steps as may be considerednecessary to give full effect to the proposed amendments to the Articles of Association ofthe Company.”
8. To transact any other ordinary business of which due notice shall have beengiven.
By Order of the Board
KHO TECK HOCK (MIA 5836)BONG SIU LIAN (MAICSA 7002221)Company Secretaries
Kuching, SarawakDated this 24 day of May 2007
NOTES:1. A proxy may but need not be a member of the Company and the provisions of Section
149(1)(b) of the Act shall not apply to the Company.2. To be valid the Proxy form duly completed must be deposited at the Registered Office of the
Company at 9th Floor, Wisma Naim, 2 ½ Mile Jalan Rock, 93200 Kuching, Sarawak not lessthan forty-eight (48) hours before the time set for holding the meeting or any adjournmentthereof.
3. A member shall be entitled to appoint more than one (1) proxy to attend and vote at thesame meeting provided that the provisions of Section 149(1)(c) of the Act are complied with.
4. Where a member appoints more than one (1) proxy, the appointment shall be invalid unlesshe specifies the proportions of his holdings to be represented by each proxy.
5. If the appointer is a corporation, this form must be executed under its common seal or underthe hand of an officer or attorney duly authorised.
Explanatory Notes on Special Businesses
a) Ordinary Resolution 9 – Authority to Allot and Issue Share
This proposed resolution, if passed, will empower the Directors of the Company to issue andallot Ordinary Shares from the unissued capital of the Company up to an aggregate amountnot exceeding 10% of the issued share capital of the Company for the time being, for suchpurposes as the Directors consider would be in the interest of the Company. This authoritywill unless revoked or varied by the Company in General Meeting, expire at the next AnnualGeneral Meeting of the Company.
b) Ordinary Resolution 10 – Proposed Renewal of Authority to Purchase OwnShares
Please refer to the Circular to Shareholders dated 24 May 2007 for further information.
NAIM CENDERA HOLDINGS BERHAD585467-M Incorporated in Malaysia
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c) Special Resolution 1 – Proposed Amendment to the Articles of Association of the Company
Please refer to the Circular to Shareholders dated 24th May 2007 for further information.
Statement accompanying Notice of Annual General Meeting
1. THE DIRECTORS WHO ARE STANDING FOR RE-ELECTION
a) The Directors who are standing for re-election at the 5th Annual General Meeting of the Company are as follows:-
Datuk Abdul Hamed Bin Haji SepawiDatuk Hasmi Bin HasnanIr. Suyanto Bin OsmanMr. Sylvester Ajah Subah @ Ajah Bin SubahProfessor Abang Abdullah Bin Abang Mohamad Alli
b) Further details of the above named Directors are available on pages 30 to 37 and their securities holdings on page 133 of the 2006Annual Report.
c) The Board met 5 times during the financial year ended 31st December 2006. Details of attendance of Directors at Board Meetingsduring the year are set out in page 49 of the 2006 Annual Report.
2. DATE, TIME AND PLACE OF THE BOARD MEETINGS
Details of Board meetings held are as follows:-
Date Venue Time
6th February 2006 Conference Room, 9th Floor, Wisma Naim, 2½ Mile, Jalan Rock, 93200 Kuching, Sarawak 3:00 p.m
28th April 2006 Conference Room, 9th Floor, Wisma Naim, 2½ Mile, Jalan Rock, 93200 Kuching, Sarawak 2.30 p.m.
15th June 2006 Pinacle 1 and 2, Holiday Inn Resort, Damai Lagoon, Jalan Teluk Penyuk,Santubong, Kuching, Sarawak 9.00 a.m.
24h August 2006 Conference Room, 9th Floor, Wisma Naim, 2½ Mile, Jalan Rock, 93200 Kuching, Sarawak 9:00 a.m.
13th October 2006 Conference Room, 9th Floor, Wisma Naim, 2½ Mile, Jalan Rock, 93200 Kuching. 10:00 a.m.
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(FULL NAME AS PER NRIC IN BLOCK CAPITAL)
(FULL ADDRESS)
Notes:1. A proxy may but need not be a member of the Company and the provisions of
Section 149(1)(b) of the Act shall not apply to the Company.2. To be valid this form duly completed must be deposited at the Registered Office
of the Company at 9th Floor, Wisma Naim, 2 ½ Mile Jalan Rock, 93200 Kuching,Sarawak not less than forty-eight (48) hours before the time set for holding themeeting or any adjournment thereof.
3. A member shall be entitled to appoint more than one (1) proxy to attend and voteat the same meeting provided that the provisions of Section 149(1)(c) of the Act arecomplied with.
4. Where a member appoints more than one (1) proxy, the appointment shall beinvalid unless he specifies the proportions of his holdings to be represented byeach proxy.
5. If the appointer is a corporation, this form must be executed under its commonseal or under the hand of an officer or attorney duly authorised.
being a member of NAIM CENDERA HOLDINGS BERHAD, hereby appoint
NRIC NO./Passport No (new) (old) of
or failing him/her the Chairman of the meeting as my/our proxy/proxies to vote for me/us on my/our behalf at the 5th Annual GeneralMeeting of the Company to be held at Holiday Inn Resort Damai Beach, Teluk Bandung, Santubong, 93756 Kuching, Sarawak, Malaysiaon Monday, 18th June 2007 at 11.00 a.m. or any adjournment thereof, in the manner indicated below:-
Resolutions FOR AGAINSTOrdinary Resolution 1 Adoption of the audited financial statements and reports theretoOrdinary Resolution 2 Approve payment of Directors’ feeOrdinary Resolution 3 Re-election of Director : Datuk Abdul Hamed Bin Haji SepawiOrdinary Resolution 4 Re-election of Director: Datuk Hasmi Bin HasnanOrdinary Resolution 5 Re-election of Director: Ir. Suyanto Bin OsmanOrdinary Resolution 6 Re-election of Director: Mr. Sylvester Ajah Subah @ Ajah Bin SubahOrdinary Resolution 7 Re-election of Director: Professor Abang Abdullah Bin Abang Mohamad AlliOrdinary Resolution 8 Re-appointment of Auditors : Messrs KPMG as Auditors and authorizing
the Directors to fix their remunerationSpecial BusinessesOrdinary Resolution 9 Authority to allot and issue sharesOrdinary Resolution 10 Proposed renewal of authority to purchase own sharesSpecial Resolution 1 Proposed amendments to the Articles of Association of the Company
(Please indicate with an “X” in the spaces above how you wish your votes to be casted on the resolution specified in the Notice of Meeting.If no specific direction as to the voting is indicated, the proxy/proxies will vote or abstain from voting as he/she/they think(s) fit.)
1. Fold here / Lipat di sini
2. Fold here / Lipat di sini
The Company Secretary
NAIM CENDERA HOLDINGS BERHAD
9th Floor, Wisma Naim,2½ Mile, Jalan Rock,93200 Kuching,Sarawak.
